NYC 1031 Exchange Attorney

1031 Exchange Legal Services in New York City

Section 1031 of the Internal Revenue Code provides one of the most powerful tax planning tools available to real estate investors: the ability to defer capital gains taxes by exchanging one investment property for another of like kind. For NYC property owners who have held appreciated real estate, a properly structured 1031 exchange can defer hundreds of thousands — or even millions — of dollars in federal and state capital gains taxes.

However, the rules governing 1031 exchanges are strict, the deadlines are inflexible, and a single misstep can disqualify the entire exchange, resulting in an immediate and potentially devastating tax liability. At Agarunov Law Firm, P.C., we guide investors through every step of the 1031 exchange process, from initial planning through the closing of replacement properties, ensuring full compliance with IRS requirements.

How a 1031 Exchange Works

The Basic Structure

In a standard (delayed) 1031 exchange, you sell your current investment property (the "relinquished property"), and the sale proceeds are held by a qualified intermediary rather than being paid to you directly. You then identify and acquire one or more replacement properties using those funds. If the exchange is properly structured, the capital gains tax that would otherwise be due on the sale is deferred until you eventually sell the replacement property without doing another exchange.

Critical Deadlines

The IRS imposes two non-negotiable deadlines. The 45-day identification period requires you to identify potential replacement properties in writing within 45 calendar days of closing on the sale of your relinquished property. The 180-day exchange period requires you to close on the replacement property within 180 calendar days. These deadlines are absolute and cannot be extended for any reason.

Identification Rules

The IRS provides three rules for identifying replacement properties. The three-property rule allows up to three properties of any value. The 200% rule allows any number of properties as long as their combined value does not exceed 200% of the relinquished property's sale price. The 95% rule allows unlimited identification if you acquire at least 95% of the aggregate value identified. Most exchangors use the three-property rule.

Our 1031 Exchange Services

• Exchange Planning & Structuring: Evaluating whether a 1031 exchange is appropriate, timing considerations, and coordination with your tax advisor
• Qualified Intermediary Coordination: Selecting a reputable QI and ensuring the exchange agreement is properly drafted
• Relinquished Property Sale: Structuring the sale contract with proper exchange cooperation language and assignment provisions
• Replacement Property Identification: Ensuring proper written identification within the 45-day deadline and compliance with identification rules
• Replacement Property Acquisition: Contract negotiation, due diligence, title examination, and closing within the 180-day deadline
• Reverse Exchanges: Structuring transactions where the replacement property is acquired before the relinquished property is sold
• Improvement Exchanges: Structuring exchanges where funds are used to improve the replacement property before taking title

New York State Tax Considerations

While New York generally conforms to federal 1031 rules, there are important state-specific considerations. If you sell a New York property and acquire a replacement in another state, New York may require a clawback of the deferred gain when the replacement is eventually sold. Additionally, NYC and NYS transfer taxes still apply regardless of the exchange — they are transaction taxes, not income taxes, and cannot be deferred.

Serving New York and New Jersey

Agarunov Law Firm is licensed to practice in both New York and New Jersey. In addition to representing clients across all five NYC boroughs and Long Island, we handle real estate transactions in Northern and Central New Jersey including Bergen County (Englewood, Fort Lee, Hackensack, Teaneck, Paramus), Hudson County (Jersey City, Hoboken, Weehawken), Essex County (Newark, Montclair, Livingston), Passaic County (Paterson, Wayne, Clifton), and Middlesex County (New Brunswick, Edison, Woodbridge).

Our dual-state licensing allows us to represent clients in cross-border transactions and provide seamless legal counsel whether your property is in New York, New Jersey, or both.