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1031 Exchange
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Enter New Glossary Term:
Delayed Exchange/Deferred Exchange (aka Starker Exchange)
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| Enter Glossary Term Description:
The taxpayer disposes of the relinquished property on one day, and then has up to 180 days from that date (or the due date of taxpayer's income tax return, including extensions, whichever event occurs first) to acquire the replacement property. The transaction must be an exchange of property for property, and not a sale of property for money that is used to acquire replacement property. An exchange occurs when the taxpayer (through the use of a Qualified Intermediary) conveys relinquished property to the same party from whom the taxpayer acquires the "replacement property."
Advantages of a Deferred Exchange:
- More completed transactions,
- Less stress because you do not have to close concurrently,
- Fewer contingencies; the taxpayer has already disposed the relinquished property prior to acquiring the replacement property,
- Complex exchanges are broken into simpler parts; especially helpful in multi-property and/or multi-state exchanges, and
- Utilizes the expertise, experience and scrutiny of a Qualified Intermediary. (Although not a substitute for a competent tax advisor regarding tax matters.)
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