“I’m planning to exchange my San Diego rental house for an apartment building in Texas. I know there’s different kinds of exchanges. I heard I should do a Starker Exchange. What exactly is that?”
Answer:
Yes.
Wow, I haven’t heard someone mention “Starker” for a good 10 years.
The name is from a 1979 court case: T.J. Starker vs. US. Starker sued to allow a deferral on capital gains for a non-simultaneous exchange.
Thus, a Starker exchange is one name for a delayed exchange, the most common type of 1031 tax-deferred exchange of investment property. You close your sale, then close your purchase within 180 days and defer all your capital gains tax.
A tax advisor and a knowledgeable Realtor can help you comply with the IRS exchange rules. They’re much simpler than people think. But if you don’t follow them exactly, you’ll get hit with a big tax bill.
I’ve helped dozens of clients exchange and they go quite smoothly when handled correctly. If you have any questions, call me at (858)457-KENT.
