Planning For Success with a 1031 Exchange

We continue talking about 1031 exchanges. Today we’re planning for success with a 1031 exchange. Thanks for tuning in to the Real Estate Today Podcast.

I’m Bob Nelson, real estate investment broker with Pac West Real Estate Investments. Joining me today is Megan McMahon. Megan is a CPA by certification and also the exchange facilitator at Cascade Exchange Services of Eugene. Megan thanks for joining me today.

Megan: Thanks for having me.

Bob Nelson: Let’s go into issues of the tax-deferred exchange. The 1031 exchange. We’ve talked about what’s required. If any of you have missed that, I post our programs on my website. Go back, take a quick listen because we’re going through the details that will keep you out of the ditch as you’re doing one of these things. What are some of the dangers? How do you counter the issues of the tax-deferred exchange? How do you deal with it?

Megan: Just plan everything out as early as you can. Talk to your CPA, talk to your attorney, talk to your broker and make sure that you’ve got things lined out. Because once that clock starts ticking, it doesn’t stop and it starts to move pretty quickly.

Bob Nelson: Okay just as soon as I have sold the property that I’m getting rid of, the clock starts. And it’s an unforgiving clock as I understand, it’s 45 calendar days including holidays, including whatever’s.

Megan: Yeah.

Bob Nelson: 45 days period. You might say “Well that’s a long time”, no it’s not. You have to get things under contract. You have to do your due diligence. Now this is not a requirement of the tax code, it’s a requirement of logic. So get ahold of Megan, ask whatever questions you have. If you’re going to use a broker, I’m always available. Go ahead Megan.

Megan: Yeah, I mean the biggest thing is if you can talk to your broker early and get things lined up so that during those 45 days, you’re not only getting under contract on a piece of property but getting it into escrow, doing your due diligence, figuring out that it’s not going to fall apart after that identification period lapses.

Bob Nelson: That’s so key. That is absolutely key.

Megan: Yeah you’re in a lot better position moving forward. Because what you don’t want to have happen is you don’t want to get past that 45 day identification period and have everything blow up and then you don’t have any other options.

Bob Nelson: Exactly. So if everything goes wrong and anything that I’d have identified simply goes away, burns down, falls off a cliff or somebody’s getting divorced and they won’t sell, I can’t have any additional time. Even though none of that was my fault.

Megan: Correct.

Bob Nelson: Okay, that’s really critical. Get ahold of Megan, she is at Cascade Exchange Services, with Cascade Title. (541)687-2233. I’m Bob Nelson, real estate investment broker with Pac West Real Estate Investments.

Join Bob Nelson and Marcia Edwards Eugene, Oregon, real estate experts daily at 5:30 on KPNW for the “Real Estate Today ” radio show.