HOW THE PROCESS WORKS
- Plan before you sell. An exchange agreement with your QI is signed before you sell your property. This begins the exchange process.
- Find a buyer and schedule your closing. Market and negotiate the sale as you normally would. The main difference is your sale contract should include language allowing assignment to your QI for the exchange.
- Sell your property. At closing, the proceeds go straight from the closing table to your QI. If you take possession of the funds, even briefly, the exchange is disqualified.
- Pick your next property within 45 days. You have 45 days from the sale to identify, in writing, the replacement property (or properties) you intend to buy.
- Close on it within 180 days. You have 180 days from the sale of your first property to close on a replacement property, using your proceeds . The QI releases the funds to complete the purchase.
- Defer your taxes. As long as you reinvest the full proceeds into property of equal or greater value, you defer thetax.