How 1031 Exchange Works

Our Specialized 1031 Exchange Services

Unlock the full potential of your real estate investments with our expert 1031 Exchange services. Navigate the complexities of tax deferral with ease and confidence.

SELL

Execute a sales contract on your relinquished property, mention the 1031 exchange within the contract to notify the buyer of your intent to do a 1031 Exchange.
Provide Qualified Intermediary (QI) contact information to your closing agent.
Upon the close of the relinquished property sale the proceeds will be wired to the QI on your behalf until you purchase your replacement property.
Your 45-day and 180-day periods start the day of the close.

ID

You have 45 days from the close of your relinquished property to identify your replacement property(ies).
There are 3 rules in which you can properly identify replacement properties; 3-property rule, 200% rule, and 95% rule.
In order to defer all taxes, the value of the replacement property(ies) must be equal or greater than the value of the sale of your relinquished property.

BUY

You can use exchange funds to close on a replacement property at any time during the 180-day period, mention the 1031 exchange within the contract to notify the seller of your intent to do a 1031 exchange.
Provide QI contact information to your closing agent.
Your closing agent will work with the QI teamto draft or obtain all necessary documents.
At closing of your replacement property or at the expiration of the 180-day period, your exchange will close and any remaining funds will be disbursed back to you.

1031 Exchange Deadlines

45 Day Identification Period

From the closing date of the sale of your relinquished property, you have 45 days to identify any replacement properties you plan to purchase.

Some exchangers may choose to not identify if they don ot find a suitable property. If the 45-day identification period ends and no replacement properties were identified, the exchange closes and funds are returned to the exchangor as taxable boot.

180 Day Exchange Period

From the closing date of the sale of your relinquished property, you have 180 days to close on replacement property.

If an identification form has been submitted, the only way to withdraw funds from your exchange is to close on identified properties or wait for the expiration of the full 180-day exchange period.

1031 Exchange Process Qualifying Factors

Property must be like-kind, nearly all real estate is like-kind to other real estate.

Property cannot be a personal primary residence or vacation home.

The same taxpayer who sells must also purchase.

The 1031 Exchange needs to be disclosed to both the buyer of the relinquished property and the seller of the replacement property.

The exchange period could be shorter than 180 days if the individuals' tax return is due prior to the 180th day, if that is the case an extension on filing the tax return would be necessary.

The price of the replacement property must be equal to or greater than the sales price of the relinquished property to avoid taxable gains. Any amount/debt not re-invested is considered "Boot" and is taxable.

The Fact Pattern and intent of the relinquished and replacement properties must support being held for investment or use in business.

If the seller of the replacement property is related to you by familiar or business association, their eligibility as a seller requires special attention to potentially qualify.