ANSWER THESE 5 QUESTIONS AND YOU WILL HAVE GUIDANCE IN 30 SECONDS.

1. Do you intend to reinvest in another property knowing that you won’t have the balance of those funds after payment of income tax? 

2. Is your expected gain large enough that deferring the tax is worth any added complexity and cost?

3. Will you be able to identify replacement property within 45 days of closing on your sale and if so, can you then close on that property within 180 days of your sale or by your tax return date (whichever is earlier)?

4. When you do ultimately sell the “replacement property” (new investment), are you prepared to pay the tax at that time, noting that the capital gains rates may increase beyond today’s hit?

5. Have you considered how your estate planning interplays with deferring the exchange? See our related article at https://weissllp.com/of-interest/.