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By ANGELA HERNANDEZ, for 1031illinois.com 9/3/2007

Tenants-in-Common can provide a professionally managed, institutionally funded turn-key real estate solution that should be carefully evaluated and compared to other real estate investments for ease of acquisition, management and sale. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. You have 180 days to actually close the second purchase. This article is intended as a very brief primer on 1031 exchanges to increase your awareness of their applicability. It is a transaction in which the replacement property is owned by an intermediary party during the pendency of the like-kind exchange until the taxpayer is able to sell her relinquished property.There are several practical problems that arise when Investors begin the difficult task of designating like-kind Replacement Properties. The improvement exchange can occur in the context of a delayed or reverse exchange.

Illinois 1031 Exchange properties

Upon completion of the improvements, or at the end of the 180th day, whichever is earlier, the EAT will transfer title to the newly improved replacement property to the Exchanger.NNN: NNN properties often are leased to only a single tenant. In most cases, their personal residence is not like-kind investment property. No tax advice is being given by this article for any specific transaction. This can be accomplished through the advance of funds from the taxpayer to the EAT, or through the receipt of funds from the EAT to the taxpayer. Net cash received can result when a taxpayer is Trading down in the exchange i.e the sale price of replacement propertyies is less than that of the relinquished. The TIC debt structure generally allows for the debt financing to assumed.

Buyer beware

In a reverse exchange, the best way to do this is with borrowed funds.Revenue Procedure 2000-37 provides much-needed guidance and a workable procedure for taxpayers wanting to use reverse exchanges. It is possible to enter into a like-kind exchange when your replacement property has not been constructed yet. The findings point to a response asymmetry with respect to the level and trend of interest rates. You want to have something to draw from in the event that there is damage done to the premises while they are renting.

About the author

If a person owns a real property that will net a gain upon sale, or a property that has been substantially depreciated for tax purposes and/or has appreciated in fair market value, then he should consider a 1031 exchange. Using a simultaneous equations model and data from the Atlanta, Phoenix and Seattle apartment markets, this research finds that apartment EREITs have paid above market prices for property acquisitions. They would then identify their replacement property (as part of the deferred 1031 exchange) as the newly constructed property being held by the EAT. Combining these two tax strategies on multi-use property has been done for years and is a powerful tax-planning tool. The typical entrance in whole commercial building begins at $1 million, but through TIC ownership, the potential purchaser is able to enjoy ownership in an institutional-type property with a minimum purchase. Agent: An entity that acts on behalf of the taxpayer. This completes the exchange.There are specialist in the area of 1031 and triple net leases that can help guide you through your investment strategy should you need them.

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