1031 Exchange
Continuity Without Compromise
As your 1031 Exchange experts, we can help you coordinate, close and hold funds on your 1031 Exchange. That gives you the freedom to change investment properties, without leaving any money on the table. We also serve as “Exchange Accommodation Titleholder” for holding title to replacement property within a Reverse 1031 Exchange. Read on for more about 1031 Exchanges, or contact us for guidance.
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What Is a 1031 Exchange?
Put simply, it allows you to sell a business asset or investment property and “exchange” it for another asset of the same kind, while deferring certain taxes like capital gains. It gets its name from Section 1031 of the United States Internal Revenue Code.
Five Steps of a 1031 Exchange
The Title Team can serve as a Qualified Intermediary (QI) for both residential and commercial 1031 Exchanges. Here is what the process looks like:
- Preparations: We will structure the exchange, prepare related documents and hold proceeds from the sale of relinquished property.
- Rights to sell: After executing a sales contract with the buyer of the relinquished property (the property you are selling), you assign your rights to sell the relinquished property to The Title Team.
- Property sale: We put the sale proceeds into an FDIC-insured institution in an interest-bearing account to maximize your funds while you find your replacement property. You have 45 days to identify up to three properties to replace the one you sold.
- Rights to replacement property: After executing a sales contract with the seller of the replacement property (the property you wish to buy), you assign your rights to buy the replacement property to The Title Team.
- Buy replacement property: Upon your signed direction to The Title Team, the exchange funds will be paid directly to the seller or closing company. You must close no later than 180 days after closing on your relinquished property.
And that’s it! The taxes on gains are deferred, so you do not owe anything to the IRS and you have followed the processes required by the IRS and Treasury regulations.
