1031 Delayed Exchange (Starker Exchange)

A Delayed 1031 Exchange is the most universal 1031 Exchange type. It provides 1031 investments with flexibility by providing a window of time after the sale of the relinquished property to identify and arrange for the purchase of the 1031 replacement property.

This type of Delayed 1031 Exchange, also referred to as a "Starker Exchange" or non-simultaneous Exchange became popular after the well-known Starker decision [Starker v. United States (1979).

A Delayed 1031 Exchange resembles a taxable real estate sale except that prior to closing on the property being sold, a set of legal documentation procedures are initiated between a Qualified 1031 Intermediary and the 1031 Exchanger. All parties to the 1031 Exchange must fully comply with the 1031 Exchange Requirements or the 1031 Exchange will fail.

The beginning of the 1031 Exchange occurs with the closing of the first relinquished property. The 1031 Exchanger then must identify and close his designated replacement (“like kind”) property within 45 days. Prior to the replacement property closing, the 1031 Exchanger, the seller, and the Qualified 1031 Intermediary must execute an Assignment Agreement transferring to the Qualified 1031 Intermediary the rights to purchase the replacement property. The 1031 Exchange is completed when the Qualified 1031 Intermediary uses the 1031 Exchange proceeds to purchase the replacement property and trades it back to the 1031 Exchanger.

Contact a Delayed 1031 Exchange Specialist today to learn more about Delayed 1031 Exchange.