Dear Vinny,
I have received an offer for my ranch, and they mentioned that it's part of a 1031 exchange. I've heard the term but don't know what it means. Can you explain what this entails and how it specifically applies to the sale of my ranch? Are there any crucial details or considerations I should be aware of as the seller to ensure a smooth transaction?
Seller's Guide to 1031 Exchanges - Ask Vinny
Posted: Tuesday, November 07, 2023
Author: Vinny Delgado, Ranch Sales | Licensed in MT
Dear Exchange,
A 1031 Tax Deferred Exchange is a mechanism to avoid paying capital gains tax on a property being sold and rolling the proceeds into a like/kind property through a third-party intermediary. An exchange buyer is one of the most solid buyers one could ask for because they have money to spend. If they don't spend it, they could face the consequences of paying taxes. In your current contract, the buyer has specifically identified your ranch with the intermediary exchange company. Under the exchange laws, the buyer has 45 days from the day of his sale to identify up to 3 properties and then must close within 180 days after the 45-day identification period expires. There is nothing more you should be concerned with regarding the sale of your ranch and a 1031 exchange. Good luck with your closing.
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