1031 And Predating The P&S
I have a house for sale and the buyer is doing a 1031 exchange. He wants me to predate the Purchase & Sale for August 2nd. I personally do not have a problem with it, but do not want to get close to closing and he has a problem with his 1031 and it messes up the sale. What is the potential gotchas of predating the contract?
Well other than tax fraud . . . .
I suspect that this is done all the time. Actually his need to close the 1031 or pay the taxes is a pretty powerful incentive for him to close.
I'm not sure why he wants you to predate the agreement. Predating the agreement does nothing to assist with his 1031 exchange. The issue is whether is closes within 180 calendar days after the disposition of his relinquished property, not when the P&S is dated and when they open escrow.
I can only guess and suspect that your buyer did not identify the property during his or her 45 day identification period and is trying to make it look like the contact is dated within the 45 day period. This will not save his or her exchange in that situation. The property would have to be clearly identified as part of a formal identification during the 45 day period OR the property would actually have to be acquired during the 45 day identification period in order to qualify for 1031 exchange treatment. Merely dating the P&S during the 45 day period does not constitute a valid identification.
Becareful, by cooperating you might find your self in the middle of a fraudulent document deal.
[addsig]