Legal Question in Real Estate Law in Illinois

Re: Transfer property to another purchase property with no tax gain

What you are describing appears to be a Section 1031 exchange, which is a tax-deferred way under the Internal Revenue Code of buying and selling some, but not all, real estate. The rules can be complicated, but I handle quite a few of these transactions, being both a CPA and a real estate lawyer.

You need to meet with someone who understands these rules to obtain an explanation and assessment of whether your fact pattern can fit into the tax-deferred exchange. If it can (and it sounds like you can make it work), you will actually need two parties, an attorney to close on the real estate and an exchanger, who can be an individual or a company, such as a title company.

Our comments are based on treating your question as a hypothetical. Accordingly, our comments could be substantially and materially different were we advised of all of the relevant facts and circumstances. Our comments are by necessity general in nature, and should not be relied upon in taking or forgoing action in your circumstances without retaining an attorney. In order to fully explore your legal matter, you should meet with us or another attorney and bring to any such meeting all relevant documents and correspondence, and any other relevant facts.

We are not hired to be your attorney, and no attorney-client relationship exists between us, unless and until you enter into a written retainer agreement with us, tender the agreed amount for a retainer and it is accepted by us. We reserve the right to decline representation should circumstances change.

As you are aware, in Illinois there are various deadlines for filing a complaint, filing an answer to a complaint, or taking other action in order to preserve your legal rights, and avoid a complete loss of those rights. You should retain counsel immediately in order to be fully advised of your rights, and to be fully informed of the applicable time period within which those rights must be asserted. If you were to delay in doing so, it might result in your potential cause of action being forever barred.

Re: Transfer property to another purchase property with no tax gain

This method of property transfer is a 1031 exchange which allow for like kind property to be sold and the proceeds reinvested without incurring tax liability. This is generally done through the exchange division of a title company. The company receives and holds the proceeds of the sale until it is directly invested in the new property. There are time restrictions on the reinvestment and time restrictions during which the new property must be officially identified. If these requirements are not strictly followed the tax consequences can be significant. We practice real estate and have handled such exchanges in our practice. If you wish to discuss the matter further, please call at 630-257-8280.