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1031 EXCHANGE

Keystone 1031 pursues opportunistic real estate investments projected to generate stable income and offset capital gains in order to preserve and grow wealth. 

OVERVIEW

Property owners seeking to sell appreciated real estate generally will incur capital gains. One way to delay payment of capital gains taxes is to reinvest the proceeds into another property under the rules of section 1031 of the tax code (commonly known as a 1031 exchange). One of KNPRE's focuses is providing institutional quality real estate opportunities to investors that take advantage of section 1031, while eliminating the hassle of active property management.

GENERAL RULES
  • Properties must be “like kind,” meaning the proceeds from the sale of your real estate must be exchanged for other real estate. For example, you can sell your multifamily assets and invest in an office property, or vice versa. Primary residences and other properties strictly for personal use are not considered “like kind” to any real estate owned for business or investment purposes and cannot be used in a 1031 exchange.

  • The replacement property must be of equal or greater value than the property you sold and all equity must be reinvested in the new property in order to qualify for a full capital gains tax deferral. Capital gains taxes will be incurred on any proceeds not reinvested in the 1031 exchange.

  • A Qualified Intermediary (QI) must hold the proceeds from the sale of your business or investment property. The QI will be responsible for releasing the funds for the purchase of the replacement property.

  • The property must be titled in the exact manner on the newly acquired property as it was on the relinquished property.

  • An investor has 45 calendar days to identify a replacement property and 180 days to close escrow on their replacement property. It is important to note that both countdowns include weekends and holidays.

     

IDENTIFYING AN EXCHANGE PROPERTY
  • Three-Property Rule: Identify up to three potential replacement properties. You may acquire one, two or all three of them, so long as the combined purchase prices are equal to, or of greater value, than the relinquished property. 

  • 200% Rule: Allows you to identify more than three potential replacement properties if their value does not exceed 200% of the value of the property sold.

  • 95% Rule: Allows you to identify more than three replacement properties with a total value that can be more than 200% of the value of the relinquished property, but only if the investor acquires at least 95% of the value of the properties they identified.