What is the 1031 Exchange Rule?

The 1031 exchange rule is part of the IRS Code. It allows people to replace business or investment property without having to pay capital gains taxes at the time of the sale. It is meant to encourage the productive use of property in trade and business. Property that is bought with the intent of creating a quick resale and private residences will not qualify for a 1031 exchange. The potential tax benefits of a 1031 exchange are significant. Therefore, the IRS has established some strict guidelines about the types of properties and the types of transactions that are eligible for this tax break.

Does My Transaction Qualify as a 1031 Exchange?
If you are trying to determine whether your real estate transaction would qualify as a 1031 exchange then consider:

• Whether the properties involved in the exchange are held for valid trade, business or investment purposes;
• Whether the properties qualify as eligible for a 1031 exchange. Section 1031 b of the IRS Code explains what is and is not eligible for a 1031 exchange. For example, real estate is eligible but stocks and bonds are not eligible;
• Whether the properties are of like kind. For example, both properties are real estate in the United States and not other types of personal property or international real estate.
• Whether you identified the replacement property within 45 days of closing on your current property and closed on the replacement property within 180 days of closing on your other property.
• Whether the proceeds from the sale of your current property must go to a qualified intermediary until you purchase your replacement property. The qualified intermediary enters a written contract with the person who is buying and selling property. The qualified intermediary holds the funds from the sale of a property and acquires the next property and then transfers the property to the taxpayer.

All of the funds must be reinvested in the replacement property. Any cash that is left over after the purchase of the replacement property is called “boot” and will be taxed.
As is the case with many tax breaks, the requirements for a 1031 exchange are strict and the penalties for not complying with all of the requirements can be significant. It is, therefore, important to work with an attorney versed in 1031 exchnages before entering a 1031 exchange transaction. If you don’t have one or are not currently working with one, you can give me a call and I will recommend one that we have that we can recommend. The attorney can make sure that all of the requirements have been satisfied and that the exchange is made pursuant to section 1031 for the benefit of your business.

All bidders need to be pre-approved if mortgage financing is to be used. FHA financing is usually the best for home buyers. Call me if you need a referral to a mortgage lender.

ATTENTION: Home Buyers as is outlined in the policy for forfeiture of earnest money deposit, please be aware that contract cancellations as a result of loan denial due to “property condition” will result in the forfeiture of the earnest money deposit. THIS POLICY IS STRICTLY ENFORCED.

Confirm with your mortgage lender that the approved financing program can be used on an AS-IS sale prior to submitting your bid!

I represent home buyers and home sellers as their exclusive REALTOR in the Southern NJ counties of Camden, Gloucester, Atlantic, Cumberland, Salem, & Burlington. Full REO service for asset managers.

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** I have posted the list on NJ HUD Homes as of 04/02/2010.

All bidders need to be pre-approved if mortgage financing is to be used. FHA financing is usually the best for home buyers. Check with me if you need a referral to a mortgage lender.

 CAMDEN COUNTY

Property Case Address Price Bed/Bath List Date Bid Deadline Priority 351-484088 224 BITTLEWOOD AVE BERLIN, NJ 08009 $125,000 3/1 03/12/10 03/21/10 Owner Occupant (Investors bid on 03/22/10) View Map   View Property Details

Property Case Address Price Bed/Bath List Date Bid Deadline Priority 351-407548 1 MCDONNELL LN CLEMENTON, NJ 08021 $60,000 5/1 03/12/10 03/21/10 Owner Occupant (Investors bid on 03/22/10) View Map   View Property Details

Property Case Address Price Bed/Bath List Date Bid Deadline Priority 351-390821 19 HARWOOD LANE CLEMENTON, NJ 08021 $120,000 3/2.1 03/05/10 03/14/10 Owner Occupant (Investors bid on 03/15/10) View Map   View Property Details

Property Case Address Price Bed/Bath List Date Bid Deadline Priority 351-364710 913 GAUNT ST GLOUCESTER, NJ 08030 $50,000 3/2 03/12/10 03/16/10 Owner Occupant (Investors bid on 03/17/10) View Map   View Property Details

Property Case Address Price Bed/Bath List Date Bid Deadline Priority 351-346695 50 JEROME AVE SICKLERVILLE, NJ 08081 $73,600 Price Reduced 3/ 1 03/12/10 03/16/10 Owner Occupant (Investors bid on 03/17/10) View Map   View Property Details

CUMBERLAND COUNTY

Property Case Address Price Bed/Bath List Date Bid Deadline Priority 351-492641 314 SHARP ST MILLVILLE, NJ 08332 $36,000 Price Reduced 2/1 02/26/10 Daily All Bidders View Map   View Property Details

Property Case Address Price Bed/Bath List Date Bid Deadline Priority 351-478663 2201 BERKELEY DR VINELAND, NJ 08361 $180,000 6/4 03/05/10 03/14/10 Owner Occupant (Investors bid on 03/15/10) View Map   View Property Details

GLOUCESTER COUNTY

Property Case Address Price Bed/Bath List Date Bid Deadline Priority 351-467089 48 MOORE ST DEPTFORD, NJ 08093 $148,500 Price Reduced 3/2 03/12/10 03/16/10 Owner Occupant (Investors bid on 03/17/10) View Map   View Property Details

Property Case Address Price Bed/Bath List Date Bid Deadline Priority 351-393590 933 LADNER AVE GIBBSTOWN, NJ 08027 $105,000 Price Reduced 5/ 1.1 03/05/10 Daily All Bidders View Map   View Property Details

ATTENTION: Home Buyers as is outlined in the policy for forfeiture of earnest money deposit, please be aware that contract cancellations as a result of loan denial due to “property condition” will result in the forfeiture of the earnest money deposit. THIS POLICY IS STRICTLY ENFORCED.

Confirm with your mortgage lender that the approved financing program can be used on an AS-IS sale prior to submitting your bid!

I represent home buyers and home sellers as their exclusive REALTOR in the Southern NJ counties of Camden, Gloucester, Atlantic, Cumberland, Salem, & Burlington. Full REO service for asset managers.

Sign up to receive free notifications into your e-mail of new and updated HUD owned homes that come onto the market. Don’t accept second-best in your HUD purchase transactions, call The HUD Expert.

Take Advantage While You Can – 61 Tailor Ln, Sicklerville – Ref#: IE5640776. If ownership is your plan, then come see this 2024-SF HUD owned townhouse on 0.04 acres in Wilton’s Corner. Has 3 bedrooms, 2.5 bathrooms, dining room, casual living room with carpeting, family room, sunny kitchen with laminate countertops, sliding glass doors, deck, patio, front porch, 1-car garage. All properties are sold in ‘As Is’. Please call Terry for more information.

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Moving On Up – 1100 Beechwood Dr, Atco – Ref#: IE5630276. Make the next big step in this 2-story 4-bedroom/2.5-bath HUD owned home on 0.46 acres in Atco. This comfortable floor plan delivers a traditional dining room, relaxing family room, casual living room with carpeting, fireplace for winter days, laundry with w/d included, kitchen with dishwasher, electric range, refrigerator, pool, deck, porch, 1-car garage, fenced yard, patio.All properties are sold in ‘As Is’. Please call Terry for more information.

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No Place Like Home – 933 Ladner Ave, Gibbstown – Ref#: UI5622846. Enjoy a comfortable lifestyle in this 5-bedroom/1.5-bath HUD owned Colonial home on 0.44 acres in Gibbstown. Great features include a casual living room with carpeting, dining room, sunny kitchen with laminate countertops, double sinks, basement laundry, in-ground pool, 1-car garage. This 1,965 sq ft home is only a short drive to I-295. All properties are sold in ‘As Is’. Please call Terry for more information.

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Get Out Of That Lease – 12 Pritchard Ln, Sicklerville – Ref#: UI5637726. And into your own 4-bedroom/2-bath vinyl-siding home in Sicklerville. This convenient floor plan delivers an inviting family room with stone fireplace, master suite with separate shower, gracious dining room, engaging living room with carpeting, captivating kitchen with dishwasher, laminate countertops, gas range, second-floor laundry, fenced back yard for energic toddlers, 2-car garage. All properties are sold in ‘As Is’. All information deemeded and should be independently verified. Please call Terry for more information.
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The American Dream – 35 Colgate Rd, Atco – Ref#: UI5622828. Starts with homeownership. Come see this 2-story HUD owned Colonial home in Ivystone Farms. Features include 4 bedrooms, 1.5 bathrooms, warm family room, casual living room with carpeting, traditional dining room, sunny kitchen with laminate countertops, dishwasher, first-floor laundry, 1-car garage. Only a short drive to Route 73 or WHP (Route 30). All properties are sold in ‘As Is’. Please call Terry for more information.

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Terry Iwaniw
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REALTOR Associates
ReSales & Investment Realty, LLC
http://www.sellmysnjhome.com
http://www.terryiwaniw.com/
http://snjrealestate.ning.com/
Cell: 609-417-1086
Office: 856-795-3111 x263
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