How To 1031 Exchange Cell Tower Lease Buyouts
A 1031 exchange is a popular option for sellers of cell tower leases looking to defer taxes. Under Section 1031 of the United States Internal Revenue Code (26 U.S.C. § 1031), a taxpayer may defer recognition of capital gains and related Federal income tax liability on the exchange of certain types of property. It is the opinion of many accountants that if structured correctly a cell tower lease buyout transaction qualifies.
How Does A Cell Tower Lease Buyout Qualify?
First, always check with your CPA to make sure your transaction qualifies. Cell tower lease buyout transactions can be structured as an easement or an assignment of the lease. An easement typically constitutes a transfer of an interest in real property under most state laws. If an easement is perpetual it is often viewed as a transfer of fee interest in real property and therefore qualifies as “like kind”.
How Do I Perform A 1031 Exchange?
To perform a 1031 exchange step one is to engage a cell tower lease expert such as Airwave Advisors to assist you in putting together a transaction that most benefits you the seller. Step two engage your CPA to ensure your CPA is on board with the proposed transaction deal structure. Step three engage a 1031 exchange services company. The sales proceeds from your transaction will need to be wired to the 1031 exchange provider, not your personal or business bank accounts.
How Much Time Do I have To Identify A Purchase?
You have 45-days from the date of sale to identify up to three properties. This 45-day window is known as the identification period. You then have 180 days (shorter in some circumstances) to acquire one or more of the identified properties, which is known as the exchange period.
How Can You Help?
We have closed over $2,000,000.00 in sales transactions in 2017 where our clients performed a 1031 exchange with the sales proceeds. By engaging Airwave Advisors you are hiring experts to help you maximize your return in your transaction.
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Disclaimer: Airwave Advisors LLC does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.