The newest form of qualified exchanges is Revenue Procedure 2002-22. This allows clients wishing to identify a passive investment, as an alternative to the active labor intensive management, repair and maintenance of income producing property.

If you wish to sell an investment property, pay no current capital gains tax and don’t want to manage the new replacement property this procedure is worth considering.

You are matched up with 20 to 50 other investors, who pool their exchange money allowing them to buy a first class office buildings, high rises, shopping malls or Hotels. This qualifies as an exchange because you will have a tenant in common interest in the asset and more importantly the deal is structured with property management in place.

Some of the reasons to consider this type of exchange:

*Can’t find suitable investment and the 45 days are almost over

*Need additional property to complete the gross dollar expenditure

*Back up plan if other property fails to meet inspection, or other conditions

*Retiring and want to simplify the stresses of tenant management

*Selling a multifamily and want a single family, and no tenants for the balance required

* From a real estate stand point property owner wouldn’t list his investment real estate until he has explored a suitable replacement property

Oil and gas tenants in common are another possible solution as these are considered mineral rights and therefore real estate.

There is so much more to get into on this subject, please feel free to call and get a general idea of how this type of IRS 1031 exchange works.