Delaware Tax Free Exchange Package

State:
Delaware
Control #:
DE-P064-PKG
Format:
Word; 
Rich Text
Instant download

Description

The Tax-Free Exchange Package contains essential forms to successfully complete a tax-free exchange of like-kind property.


This package contains the following forms:



(1) Exchange Agreement

(2) Exchange Addendum

(3) Certification Of No Info Reporting On Sale Of Exchange

(4) Like-Kind Exchanges

(5) Sale of Business Property

(6) Personal Planning Information and Document Inventory Worksheets


Detailed Information on each form:


1. Exchange Agreement - This form is used to establish the intent to enter into an exchange agreement and to otherwise qualify the contemplated transactions under the qualified intermediary safe harbor.


2. Exchange Addendum - In this form, the parties amend an existing contract to buy and sell real estate and agree that the Exchanging Party's rights under the contract are assignable prior to closing to structure an exchange of the property under Section 1031. The Cooperating Party agrees to reasonably cooperate in such exchange with the Exchanging Party.


3. Certification Of No Info Reporting On Sale Of Exchange - Complete this form to determine whether the sale or exchange should be reported to the seller, and to the Internal Revenue Service on Form 1099-S, Proceeds From Real Estate Transactions.


4. Like-Kind Exchanges - This form is used to report each exchange of business or investment property for property of a like kind to the Internal Revenue Service.


5. Sale of Business Property - This form is used to report gains, losses and recapture amounts from the sale of business property and involuntary conversions.

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FAQ

To file a zero dollar tax return, you will complete Form 1040, enter zeros for your income, and explain your situation in the appropriate sections. This is straightforward and ensures compliance with tax regulations, even if you have no income to report. Leveraging tools on our US Legal Forms platform can guide you through the steps for filing accurately and seamlessly.

The exchange allows for the deference of any taxable gains on the property that is first sold.The replacement property must be secured, and the exchange finalized no later than 180 days after the sale of the original asset.

Normally the IRS does not allow you to conduct a 1031 exchange with your primary residence. That's because the home that you live in isn't being used as an investment property or being held for business purposes. Instead, your primary residence is used to provide shelter for your family.

Delaware Statutory Trusts, or DSTs, are an alternative for 1031 exchange investors seeking replacement properties, offering the potential for monthly income and diversification without any on-going landlord duties.Although DST investments have many positive attributes, they are not a good fit for all investors.

Simply put, the exchange occurs when the proceeds from one sale are used in the subsequent purchase. It is named after IRS Code section 1031. In terms of real estate and/or mortgage, when a homeowner sells one investment property to buy another, like property, they can offset or even fully defer capital gains tax.

Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free. The exchange can include like-kind property exclusively or it can include like-kind property along with cash, liabilities and property that are not like-kind.

The main requirements for a 1031 exchange are: (1) must purchase another like-kind investment property; (2) replacement property must be of equal or greater value; (3) must invest all of the proceeds from the sale (cannot receive any boot); (4) must be the same title holder and taxpayer; (5) must identify new

A 1031 exchange gets its name from Section 1031 of the U.S. Internal Revenue Code, which allows you to avoid paying capital gains taxes when you sell an investment property and reinvest the proceeds from the sale within certain time limits in a property or properties of like kind and equal or greater value.

Trade up in real estate value with one or more replacement properties. Reinvest all of your 1031 exchange proceeds from the relinquished property into the replacement property.

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Delaware Tax Free Exchange Package