In some 1031 exchanges, the taxpayer conducting the exchange may wish to sell the relinquished property at auction. This is possible, but there are several things to keep in mind when conducting exchanges at an auction. This article is all about 1031 exchanges involving auctioned property. We’ll explain all the basic details you need to be aware of when exchanging auctioned property.
Selling at Auction
The first thing you want to do at the auction is to notify the auctioneer that the property is being sold as part of a 1031 transaction. The auctioneer can then pass that information along to the bidders and inform them that whoever wins will need to sign an acknowledgment stating the seller has assigned their rights in the purchase agreement to the qualified intermediary. This is a relatively simple request, but it is essential that you have the cooperation of the person that wins the auction in order to complete a successful 1031 exchange.
Buying at Auction
If you are on the other side of the transaction (you’re purchasing replacement property at auction) there are some additional items to keep in mind. Again, you should communicate with the auctioneer your intention to purchase the property as part of a 1031 transaction. This will likely require you to include a 1031 cooperation clause in the purchase agreement to ensure the seller’s cooperation.
1031 Exchange Company in Minneapolis, MN
At CPEC1031, LLC, our qualified intermediaries have over two decades of experience facilitating real property exchanges for clients throughout the state of Minnesota. Our intermediaries make the 1031 exchange process easy for you by advising you and preparing all of your documents. If you are looking to save taxes on your next real estate sale, a qualified intermediary can help you. Contact our 1031 exchange professionals today to discuss the details of your exchange. Our primary office is located in downtown Minneapolis, but we work with clients throughout the country.