Although 1031 exchanges have proven to be quite useful, they are also known for their tiring process and complexities. If you do not know what to do and what not to do, you will mess up the whole process. That is why it is advised to exchangers to not deal with 1031 exchange on your own if you are not totally familiar with its rules and regulations. You can get in touch with 1031 exchange experts in Salt Lake City. They will help you out with the entire process and get an interest free loan from the government. They will also help you avoid common mistakes people make with 1031 exchanges. In this article, we will tell you what those common mistakes are. You should steer clear of them in order to exchange like properties without any trouble.
Not Taking Help Or Selecting An Inexperienced Advisor
As we mentioned above in the introductory paragraph, it is critical to take help from an advisor. However, you should do that before relinquishing property. This is advised because it won’t cost you nothing as the broker’s fee will be given by the seller. Also, it is critical to work with advisors who have experience with 1031 exchanges. If you work with an inexperienced advisor, you won’t be able to get the benefits of 1031 exchange.
Going With Wrong Property
It is essential to have a proper acquisition criteria in place. You should take into account things such as cost, region, asset type, return after taxes, length of tenancy, level of management, etc. The advantage of working with an advisor is that he/she can help you prepare in advance a proper acquisition criteria. Not just this, an advisor can also help out with better sourcing and earlier review. It is easier to buy, manage, and review net lease properties but an advisor will guide what properties you should go with.
Not Taking IRS Timing Seriously
There are time frames set by the IRS within which you have to make key decisions. For example, as a buyer, you have 45 days within which you have to name the replacement property. And within 6 months of relinquishing the previous property, you will have to close on the asset. Generally, buyers have the option of naming three replacement properties. Also, it is essential to have the desired property under contract within the 45 day period.
So, there you have it. These are some of the most common mistakes that investors make with 1031 exchanges. You can easily avoid these mistakes by educating yourself 1031 exchanges. Also, having experts in this field by your side will make things a lot more easier for you.