I’m buying a house and the seller has sent me an addendum to the purchase agreement. It states: “Buyer to cooperate with seller’s 1031 exchange at no cost to the Buyer.” I googled but can’t find what this means for me (the Buyer). Are there any downsides or anyway this affects me?
Downside to you is that you will need to align with their timeline rather than yours. They will have a strict timeline to find, have an offer accepted, and close on another property for them to purchase, so they may drag out your purchase timeline if they have trouble identifying candidate properties.
Seller is saving Taxes. Nothing wrong.
Avoiding*
Deferring**
You don’t have a real estate agent to ask this question and prefer to ask a bunch of random people on blind?
I usually find diamonds in the rough
Check the term on closing. If they can't guarantee the closing date then walk away. You don't want to be stuck in a contract indefinitely.
1031 has strict time lines in order to complete. But you have a pint at minimum call out a define the dates (from the 1031)
Hopefully they already have another property in mind to do the exchange plus a few backups.
Iirc they have up to 180 days to find their next property. Which likely means your closing date may be up to half a year from now. Or never if they can't find a place.
The downside is that the seller won't pay taxes, which means the govt would have a smaller budget which directly impacts any public services you make use of
Horrible take
Lmao since when giving billions to foreign nations is a public service gtfo
Means the seller is smart and going to exchange the property for another since it's dumb to ever sell real estate. You need to ask your agent what this will mean, it could factor into the rent back, closing time etc. The sellers has a limited time frame to buy a new property.
Your realtor should help with this. They are differing their taxes and have a finite amount to close the transaction. Should not be an issue to you. But this should have been mentioned in the disclosures.
Not a big deal. A 1031 allows you to take your gains from one investment and out it into another. I’ve done it a few times. It’s a way to avoid paying capital gains
It's a way to defer paying capital gains but not avoid totally
Deferring until your death is avoiding.