Experienced Legal Counsel for 1031 Tax-Deferred Exchanges
South Florida law firm enables clients to defer capital gains liability
Real estate transactions are subject to taxes on capital gains and depreciation recapture. However, when proceeds of certain property sales are rolled over into a new property purchase, Section 1031 of the Internal Revenue Code allows the taxable gain to be deferred through an exchange. Since strict requirements exist, sound legal counsel is advised. The South Florida attorneys of Norma Echarte & Associates have both the skill and experience to guide you through the exchange process. We draft and review 1031 exchange documents to safeguard clients’ interests and avoid any ambiguity. Our attorneys can advise you on the tax ramifications at each stage and ensure that the transaction complies with IRS regulations and Florida law. Additionally, our legal team serves as Qualified Intermediaries for simultaneous and delayed 1031 transfers of eligible rental homes, condominiums, and other residential or commercial real estate.
Knowledgeable legal guidance for high-stakes transactions
It’s important to know that transactions involving tax-deferred exchanges are subject to complex rules and close scrutiny by the IRS. For example:
- Both properties must be used for investment, business or trade purposes.
- The new property must be of equal or greater value (after adjusting for closing costs).
- The same individual or entity must hold title to the new property.
- The exchanger must identify potential replacement properties within 45 days after the tax-deferred sale.
- The proceeds from the first sale must be held by a Qualified Intermediary until they are properly reinvested into a new property.
- The exchanger cannot access the proceeds from the sale.
- The purchase of the new property must be completed within 180 days after the sale of the “old” property.
If done correctly, tax-deferred exchanges can confer significant financial benefits. However, even minor missteps can result in disqualification, leading to tax liability and potential penalties. If you are unsure whether this type of transaction is a good idea, our firm can explain the advantages while helping you avoid the pitfalls.
Attorneys facilitate reverse 1031 exchanges when the property purchase occurs first
Clients sometimes wish to secure the advantages of a 1031 exchange but are compelled to purchase the new property before selling the existing property. This process is referred to as a reverse 1031 exchange. During this procedure, an Exchange Accommodation Titleholder (EAT) is established. This is a legal entity created for the purpose of holding one of the properties during the exchange process. Ownership is transferred to the EAT. Though the same deadlines apply, either the replacement or relinquished property can be “parked” in the EAT. While the deadlines are similar to those of a standard 1031, if the replacement property is purchased before the sale, the exchanged property or properties must be identified within 45 days.
Contact an accomplished South Florida real estate attorney for assistance with a property exchange
If you are considering a 1031 tax-deferred exchange, the attorneys of Norma Echarte & Associates in Miami have extensive experience handling the legal and tax complexities of these transactions. We represent clients throughout South Florida in a complete range of real estate matters and have convenient satellite offices in Fort Lauderdale, West Palm Beach, and Boca Raton. Please call 305-501-2844 or contact us online to schedule a meeting with us.