Many times, those involved in an exchange approach the end of the 45-day identification period without a suitable replacement property. Rather than pay the tax or acquire a sub-standard property, you can put your money into a tool known as a 1031 Parking Lot.

The mechanics are straightforward. When you purchase one of the designated "Parking Lot" properties, you receive a "Put" option. This option, when exercised, requires the re-purchase of your undivided interest in the property for exactly what you paid for it. This "Put" option grants investors flexibility not previously available to the 1031 exchange industry. However, the Parking Lot program still utilizes IRC 1031 and must adhere to strict guidelines in order to work properly. There are established timeframes in which the option can be exercised and the "Put" cannot be exercised earlier than one year from the original purchase date.

Many "Parking Lot" properties guarantee a monthly income while you hold the "Put" option. This passive investment provides investors with unrivaled freedom from the constraints of 1031 exchange regulations. The program successfully defers taxation and is the only sanctioned means of 'extending' the identification period. The "Put" option affords you the flexibility to exchange out of the parking lot property to another property of your choice after one year with all of your invested money plus a monthly return.

The flexibility provided by this program is a benefit to taxpayers and the professionals that serve them. This unique option helps investors cope with the difficult and stressful decisions of real estate investment. Every exchanger should identify a "Parking Lot" property as a third choice 'back up.' The use of this program as an investment safety measure and as an extension of the identification period enables more exchanges to be completed and prevents the unnecessary payment of capital gains taxes.