Q: Is this legal? Does the IRS know about this?

A: Yes. Section 1031 is part of the Internal Revenue Code. Section 1031 has been around for decades and the use of 1031 exchanges has been approved by courts and set forth in Treasury Regulations.

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Q: Can I buy before I sell?

A: If structured correctly - yes. In such a situation Burns 1031 can establish an LLC to be an "Exchange Accommodation Titleholder" to hold the property for up to 180 days while you sell your property. This is a reverse exchange.

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Q: Can I use sale proceeds to pay down debt on a property I already own and still qualify under 1031?

A: No. That is exchanging real property for debt relief. Exchanges must be "like kind" - in most cases, real property for real property.

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Q: Can I use money held for a 1031 to improve my acquisition property?

A: If structured correctly - yes. This is an "improvement exchange" and Burns 1031 can hold title through an LLC and pay for improvements that are to be performed within 180 days of acquisition.

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More questions? Call Burns 1031 Tax Deferred Exchange Services, LLC

Washington state law, RCW 19.310.040, requires an exchange facilitator to either maintain a fidelity bond in an amount of not less than one million dollars that protects clients against losses caused by criminal acts of the exchange facilitator, or to hold all client funds in a qualified escrow account or qualified trust that requires your consent for withdrawals. All exchange funds must be deposited in a separately identified account using your taxpayer identification number. You must receive written notification of how your exchange funds have been deposited. Your exchange facilitator is required to provide you with written directions of how to independently verify the deposit of the exchange funds. Exchange facilitation services are not regulated by any agency of the state of Washington or of the United States government. It is your responsibility to determine that your exchange funds will be held in a safe manner.