Have you ever done a 1031 property exchange? Do you know how stressful it can be? In case you have never done it before, you should consider asking the help of a professional company, because you would be overwhelmed by the multitude of conditions you have to meet. And in case you are doing something wrong, not only that you would not be able to change the location of your business, but you would also have to pay costly taxes. When collaborating with a professional dst company you would not have to worry about any aspect, because they would offer you quality advice, and they would provide you help every step of the process. In case you decide to handle this exchange by yourself, it is recommended to avoid some of the following mistakes, because they could influence your property exchange.

Mistakes to avoid in a 1031 property exchange

Choosing the wrong dst company

When you have in view doing this exchange you have to collaborate with a dst company, because you would need advice in handling the process. The company would manage the exchange for you, and when needed they would act as the intermediary for the money, because you would need a third party to do this, in order to qualify for the exchange. It is important to work with a professional company, which has experience in the domain because you have to be sure that you would see all the properties available on the market for the exchange. They have a wide knowledge about the properties listed at national level, so they would offer you a wide list from which to choose.

Selecting the wrong property

The main aspect that would influence the exchange is the property you would choose to exchange yours with. Therefore, you have to thoroughly consider it, and you have to have in view aspects like price, region, asset type, length of tenancy and region. If you are working with a professional advisor, they would help you find the right property for you, because they have experience in this field, and they know which one would bring you more benefits.

Underestimating the time of the exchange

The majority of owners are doing this mistake. The rule requires you to formally name a replacement property for yours within 45 days, and you have to close the asset within 6 months. But, in the majority of cases, property owners name two or three properties they consider suitable to replace their own. However, the mistake is that they believe they can search for these properties around 44 days, when they actually have to have the desired place under contract in the 45 day. In case you would not have the property under contract during this period, the seller is the one who has the power in the transaction, and this might bring you different disadvantages. They can change the terms of the exchange in the last minute and you would not be able to do anything, so you should ask a company to handle the process, because they would not allow the seller to have the leverage.

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