# Blog | Security 1st Exchange

Blog | Security 1st Exchange

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- 1031 Disclosure The IRS requires that if any party to a transaction wishes to do a 1031 Exchange, all parties to the closing are made aware. The best place to do this is in the purchase and sale agreement.

- Basics of a 1031 Exchange To structure a 1031 Exchange property under I.R.C. Section 1031, there are some basic requirements that a taxpayer must meet.

- Closing Costs There are always questions from taxpayers as to which closing costs can be paid with sales proceeds when doing a 1031 Exchange.

- Delaware Statutory Trusts It is well understood that when performing a 1031 Exchange, the taxpayer must acquire new property which is “like-kind” property.

- Disaster Extensions for 1031 Exchanges Unfortunately, a 1031 Exchangor may find themselves in the middle of a 1031 Exchange when a federally declared natural disaster strikes.

- Drop and Swap Transactions It is common in a transaction that title to a property is held by entity made up of multiple owners, but upon the sale of that property, some of the owners want to do a 1031 Exchange while the others want to cash out.

- Exchange Starts Later in the Year When you perform a 1031 Exchange, you will need to report that transaction on the appropriate year’s tax return.

- Identification Rules Section 1031 requires that a taxpayer doing an exchange identify their replacement property while following certain rules.

- Related Parties There are specific rules if you are attempting to do a 1031 Exchange  with a Related Party. The definition of related parties is a combination of sections of the tax code, Sections 267(b) and 707(b).

- Reporting a 1031 Exchange We receive numerous questions about how you should report your 1031 Exchange on your tax return.

- Restrictions on Receiving Cash It is important to understand the limitations that the IRS has put in  place. The 1031 code limits a taxpayer’s right to “receive, pledge,  borrow or otherwise obtain the benefits of the funds…held by an  intermediary”.

- Same Taxpayer Requirements IRC 1031 requires that the same taxpayer that relinquishes property must acquire the replacement property. This requirement is in place to  maintain a continuity of tax.

- The Exchange of Vacation Properties Many taxpayers have vacation properties, maybe in mountain or beach  areas, they rent out for a period of time in a year and also use for  their personal use during the year. Does the fact that they use the  property personally disqualify it from 1031 treatment?