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Contact Information
Kathy Cramer Green,ABR, DE & MD, Associate Broker,MD

Phone
(800) 234-1777 x69022
Fax
(302) 539-1658
Office
(302) 829-9022

E-Mail Me

Coldwell Banker Residential Brokerage
39682 Sunrise Court
Bethany Beach, DE 19930

Articles and Links
Kathy's Web Page
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Leveraging Your Money
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Tax Deferred Exchanges
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Indian River School District
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Mortgage Glossary
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Length of Your Mortgage
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Saving for the Down Payment
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Closing Costs
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Getting Your Finances in Order
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When To Pay Points
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DE & MD Realtor

Tax Deferred Exchanges

Power to Protect, Grow & Diversify

A properly structured exchange allows you to sell property, reinvest the proceeds in new property and defer all capital gain taxes. 1031 (a) (1) states: "No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged soley for property of like-kind which is to be held either for productive use in a trade or business or for investment."

Flexibility

Capital gain deferment requires exchange of "like-kind" relinquished property for other "like-kind" replacement property. Real property held for investment or used in a trade or business can be exchanged for other real property held for investment or used in a trade or business.

Powerful Strategies

Delayed Exchange - this is the most common exchange format, providing investors up to a maximum of 180 days to purchase replacement property. The use of a Qualified Intermediary is required to complete a valid delayed exchange. Simultaneous exchange - most investors today use an intermediary to safely facilitate a simultaneous exchange. Improvement Exchange - This exchange allows you to use exchange proceeds to make improvements to existing property or build new replacement property. Reverse Exchange - This is the purchase of replacement property prior to closing on relinquished property. Personal Property Exchange - Personal property, i.e. aircraft or business equipment can qualify for tax deferral.

Sale of Relinquished Property

Prior to closing the sale of the relinquished property, the Exchanger enters into the Exchange Agreement with an intermediary. Pursuant to the agreement, an assignment is executed prior to closing and the intermediary assumes the Exchanger's purchase and sale agreement. The intermediary instructs the closing/escrow office to directly deed the property from Exchanger to buyer. Proceeds are transferred directly to the intermediary, protecting the Exchanger from actual or constructive recipt of funds. 1031 regulations mandate restrictions on the Exchanger's ability to access exchange proceeds at any time. Please consult with an intermediary for more details on these restrictions.

Replacement Property

Exchanger must properly identify potential replacement properties within 45 calendar days. The intermediary provides the Exchanger with specific identification requirements.

Purchase of Replacement Property

Exchanger has 180 calendar days from closing the relinquished property, or tax filing date, whichever is earlier, to acquire "like-kind" replacement properties. Prior to closing on the replacement property, the Exchanger assigns the purchase and sale agreement to the intermediary. After assignment is executed, exchange is complete when intermediary purchases the replacement property with exchange proceeds and transfers it back to the Exchanger by a direct deed from seller.

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