Exchanger's should use this form as an addendum to their contract in order to show their intent to structure the transaction as a 1031 exchange and to contractually bind the other party to cooperate.

Most investors structuring their transaction as a 1031 exchange are aware that they must identify their replacement property within 45 days of the sale of their first relinquished property. For example, the identification of the replacement property will read “123 Main St., Anytown, USA”, or some suitable derivative specifically identifying the property, such as a tax block and lot. If the taxpayer is acquiring a 100% interest in the property an identification merely listing a property address would be entirely correct. But what about if the taxpayer is only acquiring a 10% interest in that property? Is that identification still correct?

VACATION HOMES have long been a source of angst among exchangers and their advisors because of the lack of guidance on whether they qualify as an investment property for IRC §1031 purposes. In the past, exchangers readily exchanged 'second homes' based on the claim that in addition to enjoying the vacation home personally, they also purchased the property as an investment, and thus, it would qualify as a 1031 exchange. Late last year, owners of vacation homes who could only show a mere scintilla of investment intent were handed a ruling that effectively ended any ambiguity in favor of structuring a sale as a 1031 exchange.

While most tax deferred exchanges of real property under §1031 of the Internal Revenue Code of 1986, as amended, involve only business or investment property, there is a significant number of transactions that involve properties that have been converted into primary residences. The recently released Revenue Procedure 2007-12 (Jan. 22, 2007) continues the Internal Revenue Service's nearly annual trend, started in 2004, of taking a closer look at these types of exchanges.

Participants of the Sept. 7th event took on-field tours of Yankee stadium and met former players CCIM, NYSCAR and SIOR hold networking and Socializing event at Yankee Stadium

New York Law Journal/August 9, 1999 - The topic of the article is whether a New York cooperative apartment is real property and thus can be exchanged for other real property. This article is widely considered to be the authority on the subject.

New York Law Journal/April 10, 2002 - The drive to satisfy both the statutory deadlines and reinvest all of the net proceeds in qualifying replacement property has spawned a boutique industry of companies that sell undivided tenant in common (TIC) interests in real property, most often triple net leased . . . .

New York Law Journal/November 24, 2003 - A cost segregation study allows investors who own residential or commercial investment property to increase the profitability of their investment by accelerating their depreciation deductions for personal property that is improperly classified as IRC §1250 real property. When purchasing or improving real estate used for business or investment purposes, real estate investors must depreciate these properties . . . .

West Real Estate Finance Journal/Summer 2000 - How unique purchasing and financing requirements can affect the structure of an exchange transaction.

New York Law Journal/November 26, 2001 - Although property owners and their advisers are becoming increasingly aware of the benefits of an IRC §1031 tax deferred exchange there are still many misconceptions about what like-kind property encompasses and what types of property qualify. Take for instance the typical sale of a chain restaurant where the proprietor owns the building housing the restaurant, the cooking equipment contained within, and the franchise rights to operate the chain restaurant. Which parts of this transaction are ripe for an IRC §1031 tax deferred exchange? The answer: the building, equipment and franchise rights.

New York Real Estate Journal - Many times an advisor to an entity which has the potential to enter into an Exchange will ask "How does this benefit my client, and how does this affect me?"

New York Law Journal/April 18, 2003 - The topic of the article is how to structure an exchange where the taxpayer already owns the replacement property and wishes to make an improvement on it. Rev. Proc. 2004-51 casts some doubt on whether or not this is still a viable form of exchange.

New York Law Journal/August 19, 2002 - Sometimes a standard legal document does not contemplate all aspects of a client's transaction, or more often, does not sufficiently clarify each party's rights and positions relative to the transaction. Equally important is the ever present need for clear drafting which will avoid future questions concerning the intentions of the parties to the instrument. Although all parties may walk away from a conversation feeling as though they are in agreement, it is the written document evidencing these agreements that will control when a dispute arises . . .

Many times taxpayers are advised that there are no extensions to these time deadlines, but technically this is not correct. In general, a taxpayer's individual circumstances or problems are not taken into consideration by the Internal Revenue Service in determining whether or not a deadline for an exchange should be extended. However, actions . . .

Primary residences are normally not a consideration when talking about IRC §1031 tax deferred exchanges, but some recent rulings have clarified what the results are when these two areas intersect. Revenue Procedure 2005-14 (1/27/2005, corrected February 3, 2005) provides for clarification and additional benefits for those taxpayers converting property between a primary residence use and a business and investment.

A Qualified Intermediary is an independent third party to the transaction whose function is to prepare the documents necessary to create the exchange, as well as to act as the independent escrow agent for the exchange funds. The Qualified Intermediary is defined by the Treasury Regulations and may not give tax or legal advice.

Exchangers have choices when acquiring replacement property. This article details some of the issues to consider when choosing a replacement property.