Ohio 1031 exchange counsel, on the exchange clock.
A like-kind exchange requires careful coordination among transaction counsel, the client’s CPA, and a qualified intermediary. Rhodium Law addresses the sale and replacement-purchase agreements, entity and title questions, and the legal deadlines that shape the transaction.
A 1031 exchange is both a real estate transaction and a tax-sensitive planning decision. When the relinquished property closes, the federal identification and completion periods begin. Rhodium Law serves as transaction counsel, addresses the contracts and ownership questions, calendars the applicable deadlines, and coordinates with the client’s CPA and qualified intermediary.
Who handles what in a 1031 exchange
An exchange only works when each seat does its own job. We are the legal counsel for the exchange, not the qualified intermediary, and we do not replace your CPA.
| Who | What they handle in the exchange |
|---|---|
| You, the taxpayer | The investment decision, and remaining the same taxpayer on both sides of the exchange. |
| Rhodium Law | Transaction counsel: the sale and purchase agreements, exchange-cooperation language, entity and titling questions, and calendaring the deadlines. |
| CPA / tax adviser | The tax analysis and reporting: gain, boot, basis, depreciation recapture, state tax, and Form 8824. |
| Qualified intermediary | Holds the sale proceeds and prepares the exchange documents so you never take receipt of the funds. This is never Rhodium Law. |
| Lender | Financing on the replacement property, coordinated with the exchange timeline. |
| Title / closing professional | The title commitment and closing mechanics on each property. |
What a 1031 exchange does, and does not do
A like-kind exchange under Internal Revenue Code Section 1031 may defer recognition of gain when the statutory requirements are met and the proceeds are reinvested in like-kind real property held for investment or business use. The gain is deferred, not eliminated: it carries into the replacement property and is generally recognized on a later taxable sale. An exchange can still involve recognized gain (boot), basis adjustments, depreciation recapture, and state-tax consequences, which is why the CPA sits on the team from the start.
Since the 2017 federal tax law, Section 1031 applies only to real property, not equipment or personal property. Within real estate, like-kind is read broadly: most investment or business real estate can be exchanged for most other investment or business real estate. A primary residence and property held mainly for resale do not qualify.
The two deadlines
Both periods run from the closing of the relinquished property, and they are firm. Within 45 days, you must identify the replacement property in writing. The replacement must generally be received by the earlier of 180 days after the transfer or the due date, including extensions, of your tax return for the year the relinquished property was transferred, a qualification that surprises investors who file in the spring. We calendar and monitor both dates as part of the engagement; the authoritative timing rules are in the IRS Form 8824 instructions.
Identification rules and taxable boot
The written identification also has to follow one of three rules. Under the three-property rule, you may name up to three properties of any value. Under the 200% rule, you may name any number of properties so long as their combined value does not exceed twice the value of what you sold. Under the 95% rule, you may name any number of any value, but you then have to close on at least 95% of that identified value. Most exchanges use the three-property rule.
The other figure to watch is boot. Boot is any value you receive that is not like-kind real estate: cash pulled out of the deal, debt that is paid off and not replaced, or personal property that comes with the building. Boot is taxable up to the amount of your gain, so an exchange is usually structured to trade equal or up in both price and debt to keep boot out of it.
Rhodium Law serves as transaction counsel. We draft or negotiate the purchase and sale agreements, include appropriate exchange-cooperation provisions, address entity and title questions, and coordinate the qualification analysis with the client’s tax adviser. Rhodium Law does not act as the qualified intermediary or provide tax advice.
Where the exchange meets your entity and estate plan
Because how a property is held drives who the taxpayer is, the exchange and the ownership structure are planned together. We coordinate the exchange with your investor LLC or holding structure and, where the property sits inside a broader plan, with real estate in your estate plan.
We serve as transaction counsel and coordinate with the client’s CPA and qualified intermediary. We do not serve as the qualified intermediary and do not provide investment advice or guarantee tax treatment.
Frequently asked questions
When should the qualified intermediary be engaged?
Before the relinquished property closes. The QI must be in place and the exchange documents signed prior to that closing; if you take receipt of the sale proceeds, even briefly, the exchange generally fails. Engaging the QI early is one of the first steps once an exchange is on the table.
Can property held in an LLC be exchanged?
Often, but the details matter, because the taxpayer who sells generally must be the taxpayer who buys. Multi-member LLC and partnership interests raise particular issues, since a partnership interest is not like-kind real property. We address the entity and titling questions and coordinate the analysis with your CPA.
How early should counsel see the purchase contract?
Before it is signed. The relinquished-property contract should carry exchange-cooperation language, and lining up the replacement property before the first closing reduces the risk of missing the 45-day window. Early involvement is where counsel adds the most value in an exchange.
Does Rhodium Law give tax advice on the exchange?
No. We handle the legal side, the agreements, the entity and titling questions, coordination with the qualified intermediary, and calendaring the deadlines. The tax analysis, boot, basis, depreciation recapture, and Form 8824 reporting stay with your CPA.
Start with a Strategy Session.
Bring the contemplated sale or the replacement property under consideration. A complimentary 15-minute Strategy Session is a brief first conversation with Intake Services to understand the situation and identify the appropriate next step. It is not legal advice.