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The Delayed Exchange: Most frequently utilised tax planning strategy. Basic guidelines – the exchanger must identify the replacement “like kind” property within 45 days of the close of the relinquished property, and purchase and close on the replacement property within 180 days once the relinquished property is sold. This allows the purchaser to avoid paying Capital Gains Tax (GGT) on the sale. CGT is payable when you exit the market. CGT is 35% if you sell and exit the market within 12 months of your property purchase. If you sell after 12 months of your purchase CGT is charged at 15% within the United States. Independent financial advice is required for international investors, as tax regulations differ in countries outside the United States.
The Reverse Exchange: A reverse exchange results when the replacement property is acquired PRIOR to the sale of the relinquished property. This allows investors up to 45 days to identify one or more relinquished properties. The reverse exchange must be completed within 180 days.
