1031 ID Rules

1031 ID Rules and Access To Funds Held By The Accommodator

In today’s fast moving Investment Real Estate world, the 45 day ID period moves very quickly. More than ever before it is critical the Exchangor be committed to either successfully completing the Exchange or terminating the account by midnight on the 45th day. The reason the 45 day time period is so important is that funds in the Accommodator’s account can only be received after the Exchangor has received all property he/she has the right to receive.

The identification must be sent or delivered in writing by the Exchangor to someone involved in the exchange who is not a disqualified party. For an identification to be valid it must be received by a qualified party by midnight on the 45th day. Identifications are usually made to the Facilitator.

The taxpayer may identify:

(a) Up to three properties of any value, or

(b) Any number of properties providing the total value of all the identified properties does not exceed 200% of the fair market value of all property relinquished.

(c) If more than three properties are identified and they exceed 200% of the relinquished property’s value, 95% of the aggregate value of the properties identified must be acquired.

Each rule works independently of the others therefore only one must be satisfied. Properties must be “unambiguously” identified by address or legal description.

The Exchangor can withdraw funds only if he does not violate any of the safe‑harbor requirements of IRC 1031(referred to as the g(6) requirements and the payment is pursuant to the written Exchange Agreement.If an Exchangor has the right to withdraw funds, the safe-harbor protection is lost, whether or not funds are actually withdrawn.

Payment Can Only be Made After:

  • The Identification Period, if no Replacement Property is identified or
  • After receipt of all identified Replacement Property or
  • At the end of the Exchange Period or
  • After a major contingency relating to the exchange that is out of the control of the Exchangor (such as destruction of the property, a zoning change, or regulatory approval) that is provided for in the exchange agreement (“Major Contingency Requirement”).

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