Inquiry On 1031
I purchased a tax certificate in Illinois and went infront of the judge on april 3, 2003, and he conveyed the property to us that same day. The Deed was put issued to us thirty day later on May 3, 2003. Our first intention was to rehab the property, but as we delved farther into planning we realized we did not have the money. Anyway, we have a contract now on the building with a set closing for March 12, 2004. It is not an option for us to wait until April 3, 2004 to defer a portion of the capital gains. Can I use the 45 day grace period with the money going to a QI to put me over the mark of April 3, 2004 to get a break on taxes? Greg
My understanding of the rules is that you cannot do this. You must hold title for 365+ days.
Gregg
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The day you purchased the tax lien and paid for it if different than your court date would be the date of purchase. Your other choice is to delay closing.
I guess I was not clear in my first post. I did not purchase the tax certificate at a tax sale on April 3, 2003. I purchased it from an existing tax buyer a year before this date. The Tax Certificate had been delinquent long enough to where I went infront of a judge on April 3, 2003, and he declared the building ours. Again, the deed was issued to us until May 3, 2003. If I have a closing on March 12, 2004, can I put the Money with a QI for a 1031 Starker exchange and if by chance do not find a replacement property with that 45 day first initial period, realize the gain on that 46th day which would be April 27, 2004. My strategy is twofold. If I find a replacement property great. But, If I do not, I feel the gain for taxes would be realized on April 27, 2004. Thus, more than 365 days (April 3, 2003 to April 27, 2004) would have passed. I appreciate any comments or answers. Greg
Greg,
You need to seek, find, and ask those questions of either an experience exchange CPA or attorney. They will need all the facts, forms, and details to make that judgement.
For the other viewers of this forum, your question is a good one. For you, possibly posed a little (lot) late. One of the keys to RE success is knowing what you want to do before you begin doing it. Something along the lines of that old saying about prior planning and performance. It is far easier to plan all the steps and details in advance rather than trying valiantly to screw them together in some ordered fashion after the fact.
Uncle reacts poorly to redoing things after the fact. Again, an old saying - if it looks like a sale, closes like a sale, has cash like a sale, it's probably a sale. Darn, I like the old saying the way it was meant to be not ammended into RE.
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