Q: When making an offer on a house, do I have to reveal that I am using 1031 monies by attaching a form?
This property was identified as a potential buy. Is there a form to attach to the offer or can I just state that that amount of money is cash?
A:
Are you doing a simultaneous exchange? If not, you should be working with a qualified intermediary.
If you're using a qualified intermediary for this like kind exchange, consult with them. A 1031 exchange is between you and the IRS, affecting only your personal or business income tax treatment. I am not aware of an affirmative obligation, described in 26 U.S.C. 1031 or in the IRC Reg 1.1031, on your part, to inform the seller of how you're attempting to have your capital gains treated.
However, it's common to include a 1031 clause in the contracts for the sale and purchase of the properties, something to the effect of "[buyer]/[seller] is aware that it is [seller]/[buyer]'s intention to complete a sale in compliance with Section 1031 of Title 26 of the U.S.C." There are strict timelines to adhere to, which you may also make note of in your contract or offer to purchase (180 days for completion of transfer, 45 days to identify property). You shouldn't count on any extensions from the IRS.
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.
