1031 Exchange FAQs
Learn the Facts Through Our 1031 Exchange FAQs
A 1031 exchange can be complex and overwhelming. We work hard to simplify the process for you. Below are frequently asked questions about the 1031 exchange process.
What is a 1031 Exchange?
A 1031 exchange is a transaction in which a taxpayer is allowed to exchange one investment property for another, thereby deferring the tax consequence of a sale.
Can I perform a 1031 Exchange on my personal property?
You cannot perform a 1031 exchange on your primary residence. Only real estate held as investment property or used for a business qualifies for a 1031 exchange.
Who needs to be involved in a 1031 exchange?
We recommend you consult an accountant, attorney, and Chicagoland 1031 Exchange to fully evaluate and understand your financial situation as well as tax and legal implications. If you decide to complete the 1031 exchange, you will also need a Qualified Intermediary in order to complete your sale and purchase.
Is Chicagoland 1031 Exchange a Qualified Intermediary?
No, Chicagoland 1031 Exchange is not a Qualified Intermediary. We are 1031 advisors and DST professionals whose primary role is to help you decide and evaluate what to do with the property you have and which property to invest in, all while navigating stringent IRS guidelines.
What is a Qualified Intermediary?
A Qualified Intermediary is a third party facilitator between the buyer and seller of 1031 exchange property investments. The Qualified Intermediary—who may not be the taxpayer or a disqualified person—enters into a written agreement with the taxpayer to acquire the relinquished property, transfer the relinquished property, acquire the replacement property, and transfer the replacement property to the taxpayer.
A Qualified Intermediary may not be an “agent” of a taxpayer, such as an accountant, attorney, or realtor who has served the taxpayer in a professional capacity within the past two years.
How many days do I have to complete a 1031 exchange?
A replacement property must be identified within 45 days of the date of sale of the relinquished property. You must close on the replacement property within 180 days of the date of sale.
Should my replacement property be valued at a certain dollar amount?
Yes. If you want to defer all your capital gains taxes, your replacement property must have a purchase price and a mortgage balance that is equal or greater than the relinquished property.
What is a Delaware Statutory Trust (DST)?
A Delaware Statutory Trust (DST) permits fractional ownership where multiple investors can share ownership in a single property or a portfolio of properties, which qualifies as replacement property as part of an investor’s 1031 exchange transaction.
What is Tenants-in-Common (TIC)?
A Tenants-in-Common (TIC) structure is a 1031 qualified form of ownership for holding title to real estate with more than one party. It enables multiple investors to own a separate and undivided interest in the property, thereby enjoying tax deferral benefits directly.
Are DST investments available to everyone?
DST investments are available to accredited investors only and accredited entities only.
What is an accredited investor?
An accredited investor is generally described as having a net worth of over $1 million exclusive of primary residence or income of over $200,000 ($300,000 with spouse if married) for each of the last two years.
How do I know which investment type is right for me?
It depends on your individual financial and investment circumstances. Chicagoland 1031 Exchange takes the time to get to know you in order to make the most appropriate investment recommendation for you.
What 1031 properties are available now?
The list is always changing. Please see our most recent 1031 Property Availability Report.
What are the risks of a 1031 exchange?
Like all real estate investments, principal and cash flow are not guaranteed. Investments are not liquid.
How do I learn more about a specific replacement property?
If you want to learn more about a specific property, we can provide you with a Private Placement Memorandum (PPM). We are also more than happy to review available replacement properties with you.
What happens when the DST sells?
When the DST sells, you’re at another inflection point. You can complete another 1031 exchange or you may decide to take the proceeds and pay the taxes. If you decide to complete a 1031 exchange, you do not have to choose another DST; you certainly can choose another property.
What if I have more questions?
We’re happy to answer any and all 1031 exchange questions. Please call us at (224) 245-5281 or schedule an introduction today.
Are you ready to talk?
Whether you're thinking about selling a property and want to better understand the 1031 exchange process and investment choices, or if you already sold your property and the proceeds are currently held at a Qualified Intermediary, we can help.
Please call us at (224) 245-5281 or schedule an introduction today.
Chicagoland 1031 Exchange proudly serves clients nationwide, including California, Illinois, Florida, Colorado, Massachusetts, and more.
The information herein has been prepared for educational purposes only and does not constitute an offer to purchase or sell securitized real estate investments. Such offers are only made through the sponsors Private Placement Memorandum (PPM) which is solely available to accredited investors and accredited entities. DST 1031 properties are only available to accredited investors (typically have a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last two years, and reasonably expects the same for the current year) and accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity please verify with your CPA and Attorney. There are risks associated with investing in real estate and Delaware Statutory Trust (DST) properties including, but not limited to, loss of entire investment principal, declining market values, tenant vacancies and illiquidity. Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated. Because investor’s situations and objectives vary this information is not intended to indicate suitability for any particular investor. This material is not to be interpreted as tax or legal advice. Please speak with your own tax and legal advisors for advice/guidance regarding your particular situation.
This site is published for residents of the United States only. Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all services referenced on this site are available in every state and through every advisor listed. For additional information, please contact Nathan Kuhn at 224-245-5281.
Chicagoland 1031 Exchange does not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstances.
Securities offered through DAI Securities, LLC, member FINRA / SIPC. Advisory services offered through Kuhn Wealth Management, Inc. (KWM), a state registered investment advisor. Insurance offered through DAI Securities, LLC. KWM dba Chicagoland 1031 Exchange is independent of DAI Securities, LLC.
