Real Estate Swap
What Does Real Estate Swap Mean?
A real estate swap involves exchanging properties to defer taxes. This transaction requires a third-party intermediary and must comply with the rules outlined in Section 1031 of the Internal Revenue Code.
It is more commonly known as a like-kind exchange.
Insuranceopedia Explains Real Estate Swap
Residential properties are not eligible for real estate swaps. Only properties held as investments or for business purposes can be exchanged in this manner.
Timing is crucial in these exchanges. Under Section 1031, the replacement property must be identified within 45 days after the sale of the original property is closed. The acquisition of the replacement property must occur within 180 days of the sale. All transactions must be facilitated by an independent third party. Taxes are only paid when actual cash changes hands.
