Can I sell my relinquished property and use a separate bank account to hold the proceeds until acquiring the replacement property?
No. If the taxpayer takes receipt of the funds in any way they disqualify their transaction from potential tax deferment. A qualified intermediary such as RockSolid is a necessary third party who facilities the exchange by taking receipt of the proceeds from the sale of the relinquished property, holding them until they are needed for acquisition of the replacement property, and then when needed giving the funds to the closing agent. This process prevents the taxpayer from ever taking receipt of funds, and enables the tax-deferment as outlined in Section 1031.
Related Questions
- Can the taxpayer just sell the relinquished property and put the money in a separate bank account, only to be used for the purchase of the replacement property?
- Can I sell my relinquished property and use a separate bank account to hold the proceeds until acquiring the replacement property?
- Can an Exchanger buy the replacement property first and then sell the relinquished property?
