Question:
“I’m selling a rental property and we’re closing in two weeks. I just talked to my tax guy and he said I should do a 1031 tax-deferred exchange. Is it too late?”
Answer:
Probably not.
Fortunately you’re deciding sooner than my client did. He called me as the grant deed (transferring ownership to the buyer) was being recorded saying he’d decided to do an exchange.
He was too late. But in your case, you have time…
First tell your agent and escrow company so they can make the necessary arrangements.
Your agent will tell the buyer’s agent that you’re doing an exchange. Since (I assume) you don’t want the sale to be contingent on you finding that property, it has zero impact on the buyers other than signing a few extra papers.
Unless they choose to be difficult, they should agree.
Tax experts say that the offer should note that you’re doing an exchange. So you’ll want you and the buyers to sign an amendment saying you’re doing an exchange.
BTW, I’m 100% sure of what I’m telling you, but since it’s tax related I have to tell you to verify with a tax pro.
