Is a "Starker Exchange" the same as "Normal Exchange"...?

Is a "Starker Exchange" different from a regular "1031 Exchange"...?

The answer is "no" -- there is no difference between a 1031 Exchange and a Starker Exchange.

1031 Exchanges are named after the section of U.S. Tax Code that allows for tax-deferred exchanges of real estate and other assets -- I.R.C. §1031. "Starker Exchanges" are named after a court case decided in 1979 (Starker v. U.S., 602 F.2d 1341 (9th Cir. 1979)).

Prior to Starker, most 1031 Exchanges were performed as simultaneous exchanges, where the buyer and seller essentially sat down at a closing table and traded deeds (or a series of people traded deeds). In the Starker case in 1979, the 9th Circuit Court of Appeals allowed for NON-simultaneous exchanges under I.R.C. §1031.

Immediately after Starker, people began referring to all 1031 Exchanges as "Starker Exchanges," and today, many people still refer to them as such. Starker exchanges are what most people would recognize today as normal 1031 Exchanges -- where the exchanger sells their Old Property, then the proceeds from the sale are held by a Qualified Intermediary until the Exchanger buys the New Property within the defined time periods.

So, if someone comes to you talking about a "Starker Exchange," fear not. They are only referring to a normal 1031 Exchange -- and the same rules apply for both.

--The Experts