Question 1

What is the downside of a 1031 exchange?

Accepted Answer

Strict deadlines, reduced liquidity during the exchange period, and added complexity, especially for reverse exchanges. If proceeds are not fully reinvested or debt is reduced improperly, part of the gain may become taxable.

Question 2

What is the 2-year rule for a 1031 exchange?

Accepted Answer

The "2-year rule" is an informal guideline suggesting that holding property for at least two years helps demonstrate investment intent, strengthening compliance if the exchange is reviewed.

Question 3

How to do a 1031 exchange in Missouri?

Accepted Answer

Work with a Qualified Intermediary to sell your investment property, identify replacement property within 45 days, and close within 180 days. Ensure proceeds never pass through your control and that all documentation is completed correctly.

Question 4

How long do you have to live in a house to avoid capital gains in Missouri?

Accepted Answer

Federal rules under Section 121 allow eligible homeowners to exclude a portion of capital gains after meeting ownership and use tests. Section 121 applies to primary residences only. Investment properties are not eligible for this exclusion but may qualify for deferral through a 1031 exchange.

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1031 Exchanges in Missouri

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