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Comparison of 1031 & 1033 Exchanges

An Eminent Domain 1033 exchange and a 1031 exchange achieve the same goal of deferring taxes, the regulations between the two sections of the IRC code differ slightly.

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Eminent Domain: 1033 Exchange

  • Do NOT have to declare candidate property:  
    • There is NO declaration timeline requirements for properties in a 1033 Exchange
  • Involuntary conversion of property: 
    • An Eminent Domain 1033 Exchange relates to properties that have been seized INVOLUNTARILY
  • 2-3 Year Timeline:
    • The 1033 exchange typically gives investors anywhere from two to three years from the date of the eminent domain or other forced conversion to close on replacement, like-kind real estate to complete the exchange. In order for a 1033 exchange to be considered complete, an actual purchase must take place, and title must be passed to the investor before the exchange deadline is up; an enforceable contract will not suffice.

1031 Exchange

  • 45-day identification period:
    • With a 1031 exchange, you MUST identify potential replacement property within 45 days
  • Requires purchase of “like-kind” replacement property: 
    • The property that is purchased to replace the relinquished property MUST be “like-kind”
  • 180 Day Timeline
    • The replacement property must be declared and acquired within 180 days of selling original property

Please call Exclusive Financial Resources at (980) 242-2533 with any questions regarding 1031 and 1033 exchange guidelines, extensions, or any other exchange related matters. You can also schedule a 15-minute consultation here or email Louis Herford atLHerford@Exclusive1031.com.