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For any 1031 Exchanger who sells a relinquished property in California and acquires a replacement property outside of California they should be aware of a clawback provision which requires that they submit a postcard every year to the Franchise Tax Board.

Tax deferred exchanges of some kind have been a part of the Internal Revenue Code since 1921. Currently, tax deferred exchanges are primarily regulated according to the provisions found in Section 1031 of the Internal Revenue Code. The rules are described here.

Reverse exchanges are transactions where the Exchanger must buy their replacement property before they sell their relinquished property. Since the IRS won'y allow them to exchange into a property they already own, they must utilize a different structure to be compliant.

The Internal revenue Service requires that 1031 Exchangers must identify candidate property or properties in which they are interested within 45 days from the sale of their relinquished property. There are two rules and one exception for how to identify properties. There also listed here.

The Internal Revenue Service requires that all properties involved in a tax deferred exchange completed pursuant to Section 1031 must involve what are known as like-kind properties. The rules which define like-kind are found in this video clip as well as in the the 1031 Exchange Guide here.

Many Exchangers ask if they can construct a new replacement proeprty using their 1031 exchange proceeds. The answer is yes, provided you complete all the construction within the 180 day exchange period. Also, since you can't exchange into property you already own you will need an Exchange Accommodation Tutleholder.