They have set regulation that make the name of the person that is tax compliant to appear on the property for identification purposes. Since he represents the person who buys the property and the holder of the title who will be responsible for filing the tax returns. Making him to take full control of the property. In this we also have a single member liability company which can also act on the capacity of the member or collude with the member to purchase the property in their individual name.
Besides, there is also another rule known as replacement rule. One thing with the replacement rule is that it is only functional within one hundred and eighty days after closing of the first property. After closing of the first property and the extension of the exchangers return the first property is suppose to be sold and exchanged with the second property.
Apart from that post closing of the first property can be done within a period of 45 days. You can use this period to identify either the accommodator or closing the entity address of the likely replacement of the first property. You should also note that the property will still be submitted for the purchase in situation when the replacement is packed. In some cases the three properties are identified regardless of their value commonly known as three party rule. On the other hand, we also have two hundred percent rule which can identify four or more property as long as the transaction does not pass two hundred percent of the property that has been sold. To conclude on this rule we have exemption rule which allows for the ninety-five percent of what is identified to be bought if its value of the item sold exceeds two hundred percent.
In addition, there is also trading up. It allows for a tax difference of one hundred percent by balancing the net market value and the equity of the property. That difference is important since it determines the tax to be paid. You also find that additional equity in property will help you in offsetting debts but additional debts will not offset the equity.
Another thing is that 1031 code does not have hold time but they take some time to determine some of the necessities. Some of the necessities will include determining whether the equipment was acquired immediately before the exchange time and others as well.
Another thing is that this rules only apply for investment or business property but not personal use. And this does not allow you to live your resident and shift to another place.