The Orginial Realty Investing Magazine
Your planned #1031 exchange is sailing along. You’ve sold your relinquished property, identified a few potential replacement properties and things are looking good. But even when everything appears to be on track, there is one way you can jeopardize it all – by failing to give proper notice.
The IRS granted safe harbor rules for exchanges to make the entire process more reliable. However, within these safe harbor provisions, the IRS also provides some “must do” requirements on the investor. One of these is the requirement that the investor must give notice in writing to all parties to each contract about the assignment of rights to the qualified intermediary.
In many cases, when there is one buyer and one seller, this notice is not an issue. But when there are multiple parties involved in the transactions, the notice requirement can get a bit hazy. As the investor who wishes to rely on section 1031 for significant tax deferral benefits, it is incumbent that you take care to ensure that all parties (including any third parties like title companies, etc.) have written notice of this assignment.
If you’re considering a 1031 exchange, please visit our website to learn more about the exchange process, our qualified intermediary services and how we can help you find and close on your next 1031 exchange property.