In most cases, tax deferred exchanges are limited to real property.

 Exchange properties must be investment or income properties.

 Replacement property must be "like-kind" (all real property is "like-kind". Real property is not "like-kind" to personal property).

 General rule of thumb that property must be held for one year to qualify for tax deferred treatment.

 Taxpayer must avoid constructive receipt of any sale proceeds, earnest money deposits or any other transaction funds. (The intermediary escrows funds.)

 Meet time limits for deferred exchanges. Identify replacement property within 45 days of closing relinquished property. Close on replacement property within 180 days of closing of relinquished property.

 For a fully tax deferred exchange, the taxpayer must trade even or up in value and equity. 

© Southern Exchange Services 2004
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