One of the most common reasons 1031 exchanges fail is because of issues relating to the acquisition of suitable replacement property. What if I can’t find suitable replacement property for my 1031 exchange in time? What if my selections fall through after the 45 days? Can I change my identifications? We get questions like this all the time. With the proper precautions, these risks are easily avoidable and TIC properties and Delaware Statutory Trusts can be a useful tool to help protect from the risk of paying the tax. If you’re not sure what a TIC or DST is there’s an overview on each at the bottom of this article. When exchanges fail (about 15% of them do), it’s often due to issues with finding/acquiring replacement property. In this article we review some of the most common and how to avoid them.
Steps for a Successful Exchange (The earlier in the process the better):
- Clarify your investment objectives
- Determine which types of investments best accomplish your objectives
- Establish at least general investment criteria (lease duration, tenant profile, geographical restrictions, etc.)
- Find specific properties that meet investment criteria
- Perform due-diligence
- Tie up properties early
- Close within allotted time period
Let one of our advisors understand your situation and help you navigate the exchange process – CALL 1-800-872-1031