Benchmark Exchange, LLC was established in 2008 to better serve our customers.
Section 1031 of the Internal Revenue Code provides an exception that allows you to defer payment of capital gains taxes when you sell business or investment property if you reinvest the proceeds in similar property through a like-kind exchange.
The IRS requires a neutral third party, or facilitator, as a qualified intermediary (QI) to facilitate the exchange. Benchmark Exchange, LLC is a QI in facilitating 1031 exchanges.
A 1031 exchange gives the exchanger the ability to reinvest the properties equity in a replacement property. To qualify for a 1031 a ‘like-kind’ property must be used to replace the relinquished property.
Exchanges must be completed within the IRS guidelines. The Exchanger has 45 calendar days from the date of the relinquished property closes to identify potential replacement properties. The purchase of the replacement property must be completed within 180 days. The IRS does not allow extensions for either the 45-day or the 180-day period.
1031 Exchange Identification Rules
3 Property Rule
Investors may identify up to three (3) potential like-kind replacement properties, without regard to their fair market value. The limit is on the number of properties.
200% of FMV Rule
Investors may identify any number of potential like-kind replacement properties, but the total fair market value identified cannot exceed 200% of the fair market value of the relinquished (sale) properties. The limit is on the fair market value of the properties.
95% Exception
Investors may identify as many like-kind replacement properties as he or she wants, but must actually acquire and close on 95% of the fair market value identified.
1031 Exchange Qualifications
Both the relinquished property you sell and the replacement property you buy must meet certain requirements. Both properties must be held for use in a trade or business or for investment. Property used primarily for personal use, like a primary residence or a second home or vacation home, does not qualify for like-kind exchange treatment.
Both properties must be similar enough to qualify as "like-kind." Like-kind property is property of the same nature, character or class. Quality or grade does not matter. Most real estate will be like-kind to other real estate. For example, real property that is improved with a residential rental house is like-kind to vacant land. One exception for real estate is that property within the United States is not like-kind to property outside of the United States. Also, improvements that are conveyed without land are not of like kind to land.
Real property and personal property can both qualify as exchange properties under Section 1031, but real property can never be like-kind to personal property. In personal property exchanges, the rules pertaining to what qualifies as like-kind are more restrictive than the rules pertaining to real property. As an example, cars are not like-kind to trucks.
For Questions & Inquiries
Please contact Shay Sides at ssides@bmktitle.com or 214-485-8637.
If you are in the Austin area, please contact austin@bmktitle.com or 512-600-6425.