Page 28 - AAGLA 2020-11
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 Member Update
Continued from page 27
having cash set aside for a rainy day. During the global COVID-19 pandemic, we have seen certain investors decide to complete a partial 1031 Exchange rather than a full exchange so that they could have some additional liquidity to possibly weather a more severe economic downturn.
It is prudent for real estate investors to understand the 1031 Exchange rules and the option to complete a partial exchange. engaging in a 1031 Exchange, an investor has only 45 days from the date of the recorded closing of the sold property to identify and list exchange properties, and 135 additional days (or 180 days in total from the date of a recorded closing) to purchase and close on their replacement property.
  Once an investor’s 1031 Exchange proceeds are transferred to a qualified intermediary used to facilitate the 1031 Exchange transaction, known as an accommodator, they have a 45 day identification timeline to remove the proceeds that they want to liquidate from the accommodator’s account. If the funds remain in the accommodator account past the 45th day, the investor’s proceeds will then remain with the accommodator until the 180th
28 NOVEMBER 2020 • WWW.AAGLA.ORG
day. This is a critical point, and investors need to be aware of when to remove their funds from their accommodator’s account in order to complete a partial 1031 Exchange and how much their estimated tax obligation will be before considering the completion of a partial exchange.
Remember, if your tax obligation from a partial 1031 Exchange exceeds the proceeds you are left with, it may be prudent to do a full exchange. It is always advised for investors to speak with their tax advisor or attorney to obtain appropriate tax and legal advice prior to deciding to complete any full or partial 1031 Exchange transaction.
  About Kay Properties. Kay Properties is a national Delaware Statutory Trust (DST) investment firm. Their online platform at www.kpi1031.com provides access to the marketplace of DSTs from over 25 different sponsor companies and custom DSTs available only to Kay Properties’ clients. The Kay Properties’ team collectively has over 115 years of real estate experience, and they are licensed in all 50 states and have participated in over $15 Billion of DST 1031 Exchange investments.
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