Use a 1031 exchange tax strategy by following these steps:
Complete sale of real estate property
Enter into a 1031 exchange agreement with a "Qualified Intermediary" to accept the proceeds of the sale
Identify a replacement real estate property within 45 days from the sale date (from step 1)
Use the "Qualified Intermediary" to transfer the proceeds (from step 2) to the seller of the replacement property
Complete purchase of replacement real estate property within 180 days from the sale date (from step 1) or by the due date of the tax return including extensions, whichever is earlier
▶ "Replacement (Like-Kind) Property" Definition:
Properties are of like kind if they are of the same nature or character, even if they differ in grade or quality. Real properties are like-kind properties, regardless of whether they are improved or unimproved
▶ "Qualified Intermediary" (QI) Definition:
Anyone who is related to the taxpayer, or who has had a financial relationship with the taxpayer (aside from providing routine financial services[1]) within the two years prior to the close of escrow of the exchange cannot serve as the QI (including employees)