Eanest Money Deposits and 1031 Exchange

Posted by Andy Gustafson on Thu, Oct 17, 2013

In a 1031 exchange, real and personal property earnest money deposits, extension or option payments are recognized as an act of good faith of the Buyer’s intent to acquire the subject property. Following guidelines is especially important in a 1031 exchange so as not to violate the g(6) limitations of constructive receipt of the Internal Revenue Code Section 1.1031. Constructive receipt is when the taxpayer has access or possession of the funds at the time of the exchange as denoted by the closing date and the fact that property ownership has been conveyed to the Buyer. One of the primary roles of the Qualified Intermediary is to hold the earnest money deposit and exchange proceeds for the taxpayer and use them towards the replacement property purchase.

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Tags: earnest money deposit

Three 1031 Exchange Myths

Posted by Andy Gustafson on Mon, Apr 18, 2011

Over the years while speaking at seminars and in phone consults, three common 1031 exchange myths appear. Prior to getting to the three myths, let's cover "what is a 1031 exchange?"

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Tags: like-kind, 1031, earnest money deposit

Earnest Money Deposits and Deductible 1031 Closing Costs

Posted by Andy Gustafson on Mon, Jun 14, 2010

In a 1031 exchange, there are selling and purchasing expenses found on the HUD settlement statement. Many of these expenses can be paid by the exchange proceeds without constituting taxable boot.

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Tags: 1031 exchange, boot, earnest money deposit

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