2A — June 18 - July 22, 2021 — M id A tlantic Real Estate Journal
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M id A tlantic Real Estate Journal
M id A tlantic R eal E state J ournal Publisher, Conference Producer . .............Linda Christman AVP, Conference Producer ...........................Lea Christman Publisher ........................................................Joe Christman Editor/Graphic Artist ......................................Karen Vachon Contributing Columnist ... Dwight Kay, Betty Friant and the Kay Properties & Investments Team Mid Atlantic R eal E state J ournal ~ Published Semi-Monthly Periodicals postage paid at Hingham, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal 350 Lincoln St, Suite 1105, Hingham, MA 02043 USPS #22-358 | Vol. 33, Issue 6 Subscription rates: 1 year $99.00, 2 years $148.50, 3 years $247.50 & $4.00 single issue - plus postage REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion Phone: 781-740-2900 www.marej.com
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Understanding the potential advantages of the 200% Rule in a 1031 exchange By Dwight Kay, Founder & CEO; Betty Friant, Senior VP and The Kay Properties Team made famous by the popular TV game show Who Wants to Be a Millionaire? Choosing the right answer in this game gives you a shot at winning big money, while the wrong answer leaves you with nothing. Investors conducting a 1031 Exchange face a similar make or break decision when it comes to iden - tifying suitable replacement properties. The right choices can help streamline a smooth and suc - cessful execution of a 1031 Exchange. Choosing wrong with properties that may not be viable or deals that are unable to close within the 180- day time period can derail the entire 1031 Exchange. The good news is that investors do get to identify more than one replace - ment property. However, just like the gameshow, once that 45-day deadline hits for iden - tifying replacement options, those answers are final. Making s that your final an - swer?” You may rec- ognize the question “I
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the most of that short list is one reason that the 200% Rule is a popular choice for many inves - tors. The 200% Rule allows an investor to identify the largest number of replacement options with four or more properties or Delaware Statutory Trust (DST) replacement invest - ments. Under Section 1031 of the Internal Revenue Code, taxpay - ers who are seeking to defer recognition of capital gains and related federal income tax liability from the sale of a prop - erty are required to formally identify a replacement property or properties within 45-days from the date that the original property is relinquished (the
day they closed the escrow on the property they sold). The tax code gives taxpayers three different options for identifying replacement properties on that 45-Day Property Identification Form – the 200% Rule, the 3-Property Rule or the 95% Rule. So, which is the best op - tion to use? Every situation is different. However, for those investors who want to maxi - mize their potential options and identify four or more replace - ment properties, the 200%Rule is a good choice to explore. How does the 200% Rule work? Exchangers can identify any number of properties as long continued on page 32A
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