1031 Tax Deferred Exchange in Florida

1031 tax deferred exchange in Florida, is under the IRS Section and it refers to permits and exemptions to the real estate capital gains tax. To perform a 1031 Exchange in Florida, one must use a qualified intermediary. The exchanger must transfer right, title, and interest to the qualified intermediary the moment the transaction is closed in escrow. The role of the Qualified Intermediary is necessary to completing a successful 1031 Exchange in Florida. The Qualified Intermediary holds the buyer and seller of property together into the form of a 1031 Exchange in Florida. The Section is also known as a Like-kind Exchange, Starker Vs. United States, or a Tax Free Exchange.

Basic Types of Exchanges

An exchange where the replacement property is closed on a different date than the closing of the relinquished property is considered a Delayed Exchange. This type of exchange is and can also be called a Starker Exchange, after the well known Supreme Court case. Delayed Exchanges are covered by the Safe Harbor Regulations. For more information on the Safe Harbor Regulations Act please visit: http://oig.hhs.gov/fraud/safeharborregulations.html

The IRS has issued new safe-harbor guidance on Reverse Exchanges. A Reverse Exchange is an exchange in which the replacement property is purchased and closed on or before the relinquished property is sold.

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Requirements for 1031 Florida Exchange

All documents have to be prepared and signed before the escrow closing.

After the closing of sale in escrow, the qualified intermediary is required to place all funds into an account of high interest. At this point, the exchanger has 45 days to identify a suitable replacement property. Identification of replacement property is satisfied by mutual acceptance and execution of a purchase and sale agreement between a seller and the exchanger.