1031 Exchange Protocols to Safeguard the Client’s Money

When we facilitate 1031 exchanges, we usually operate under the qualified intermediary safe harbor. Under that modality, we act as a third party administrator to facilitate 1031 exchanges. However, this is not the only safe harbor that’s allowed when conducting 1031 exchanges. Another safe harbor is known as the qualified escrow agent safe harbor.

Under that safe harbor, we have the 1031 exchange sales proceeds held by a bank acting as a fiduciary under a qualified escrow deposit agreement, wherein the bank plays the role of the qualified escrow agent. Their job is to safeguard the money and not release it without the client’s written authorization. That way the client can sleep easy at night knowing they have a reputable bank holding their money pursuant to a qualified escrow deposit agreement and they’re not allowed to release the funds without the client’s explicit authorization.

In certain circumstances, we will even introduce the client to the banker at the bank that will be holding their funds and have them create a password that’s only known to the bank and the client. Then, in order to release the funds, the bank will not only need to check for your signature authorization, but also do a callback directly to the client to confirm the password and verify the wiring instructions.

These are just a few of many protocols that we put in place to safeguard our client’s 1031 exchange funds.

1031 Exchanges for All Taxpayers

Many people don’t realize that 1031 exchanges can be utilized by any United States taxpayer who owns qualifying real estate (i.e. real estate held for investment or business purposes). A lot of the folks we work with are small, mom and pop shops who want to utilize the awesome power of section 1031 to defer their capital gains taxes and build their wealth over time. We can help you too. Contact the qualified intermediaries at CPEC1031, LLC to learn more about our services and how we can help you take your first steps on the road to tax-deferral.

  • Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2024 Copyright Jeffrey R. Peterson All Rights Reserved