I have just signed a contract to lease/purchase a large commercial building that I can not exercise my purchase option until September 2008 with a minimum 60 day close of escrow. My question is what steps do I need to take in order to sell my current four other investment properties and use this money as the basis for a like exchange ?
Step 1- Interview and select a competent 1031 Exchange Company. Check for stability in the market place and a suitable insurance coverage for your sale funds on your relinquished properties to be safe while awaiting your exchange.
Step 2- Confirm all of the four sale transactions meet the proper exchange requirements with your accountant or advisor.
Step 3- Remember that the earliest the 1st property can sell is 180 days prior to the close of escrow on the newly acquired property. (in the example above the September 2008 option is exercised and C.O.E. 60 days is somewhere around November 1, 2008. So therefore counting backwards 180 days is somewhere around May 1, 2007 for the 1st of the sales to close escrow.
Remember and pay special attention to your close of escrow dates and not so much to your actual contract of sale dates. Interview a licensed Real Estate agent to help you with the decision process for guidance throughout this process including the possibility of selling your properties and structuring a lease back payment while in escrow awaiting the extended closing date.
