Contracts
A Connecticut buyer and seller are in contract. The seller wants to do a 1031 exchange to defer capital gains taxes. The buyer must:
AAgree to change the purchase price to accommodate the exchange
BCooperate with the seller's exchange at no additional cost or liability to the buyer✓ Correct
CRefuse participation since 1031 exchanges only involve the seller
DAllow the seller unlimited time to identify replacement properties
Explanation
A 1031 (like-kind) exchange involves the seller exchanging the sale proceeds for a replacement investment property. The buyer is typically asked to sign an assignment acknowledgment.
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