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Is
a "Starker Exchange"
different from a regular "1031
Exchange"...?
The answer is "no" -- there is
no difference between a 1031 Exchange
and a Starker Exchange.
1031
Exchanges are named after the
section of U.S. Tax Code that
allows for tax-deferred exchanges
of real estate and other assets
-- I.R.C. §1031. "Starker
Exchanges" are named after a court
case decided in 1979 (Starker
v. U.S., 602 F.2d 1341
(9th Cir. 1979)).
Prior
to Starker, most
1031 Exchanges were performed
as simultaneous exchanges, where
the buyer and seller essentially
sat down at a closing table and
traded deeds (or a series of people
traded deeds). In the Starker
case in 1979, the 9th Circuit
Court of Appeals allowed for NON-simultaneous
exchanges under I.R.C.
§1031.
Immediately
after Starker,
people began referring to all
1031 Exchanges as "Starker
Exchanges," and today, many
people still refer to them as
such. Starker exchanges are what
most people would recognize today
as normal 1031 Exchanges -- where
the exchanger sells their Old
Property, then the proceeds from
the sale are held by a Qualified
Intermediary until the Exchanger
buys the New Property within the
defined time periods.
So,
if someone comes to you talking
about a "Starker Exchange,"
fear not. They are only referring
to a normal 1031 Exchange -- and
the same rules apply for both.
--The
Experts
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