The Benefits of Working with a Qualified Intermediary on Your 1031 Exchange

A qualified intermediary is an essential part of any 1031 exchange, but many people are unaware of the true benefits of hiring an intermediary. In this article, we are going to discuss a few of the many benefits of working with a qualified intermediary on your 1031 exchange of real estate.

A Deep Pool of 1031 Exchange Knowledge

Perhaps the greatest benefit of working with a qualified intermediary is the deep pool of 1031 exchange knowledge you have access to through them. Qualified intermediaries are professionals who specialize in facilitating 1031 exchanges of real estate. They are an in-depth knowledge of the process, regulations, and guidelines. They can answer all of your questions that relate to 1031 exchanges.

Ensuring Your Exchange is Successful

1031 exchanges may appear simple, but they can get complicated quickly and not all exchanges are ultimately successful. A qualified intermediary can examine the details of your specific property and ensure that you are set up for a successful exchange with 100% tax deferral.

Attending to the Details & Documents

There are many documents and details that need to be lined up during the 1031 exchange process. This can be overwhelming for many taxpayers. Let a qualified intermediary attend to all the details and documents for you.

1031 Exchange Intermediaries

Looking for help with your 1031 exchange? The qualified intermediaries at CPEC1031, LLC have the skills and resources necessary to make sure your exchange of real estate is a success. Our team can guide you through the process, prepare necessary documentation, and answer any questions you may have along the way. We’ll make sure you are fully prepared when it comes time to close on your properties. Our primary office is located in Minneapolis, but we work with clients throughout the country who want to defer their taxes when selling qualified real property.

What Can a Qualified Intermediary Do For Your 1031 Exchange?

Many people who are new to the world of 1031 exchanges have questions about the role of the qualified intermediary. In this article, we are going to discuss what a qualified intermediary can do for your 1031 exchange.

Guide You Through the Process

The exchange process seems simple on the surface, but there are a wide range of potential pitfalls. A qualified intermediary knows the process inside and out and can make sure you don’t fall prey to any common mistakes.

Prepare Necessary Documentation

As with any real estate transaction, there is a lot of paperwork that goes along with a 1031 exchange of real estate. If you miss a form or mess something up it could jeopardize your entire exchange. A qualified intermediary can take this off of your plate and prepare all of your required documents in preparation for closing.

Answer Your Questions

Every 1031 exchange is unique, and every taxpayer conducting a 1031 exchange has a lot of questions that they may not be able to find answers to online. A qualified intermediary can answer all of the questions you have regarding your 1031 exchange so you feel confident that your exchange will be a success.

Reach Out to a Qualified Intermediary

Want to learn more about deferring capital gains taxes on the sale of investment real estate? Reach out to a qualified intermediary today to walk you through the process. The earlier you get started on your 1031 exchange, the better. Making all the necessary preparations can help ensure that your exchange goes smoothly and that you defer 100% of your gains. At CPEC1031, LLC we have two decades of experience working on like-kind exchanges of real property. Contact us to see if your property qualifies for 1031 exchange treatment.

• 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

Information to Send your Qualified Intermediary to Start a 1031 Exchange

The information that you need to provide your Qualified Intermediary to begin your 1031 exchange is pretty basic. In this article, we will outline all of the info you should have prepared for your qualified intermediary to ensure a smooth 1031 exchange.

Purchase Agreement

First off, it’s a good idea to send the purchase agreement that you’ve entered into (the sales contract that you’ve entered into for the sale of your relinquished property).

Basic Information

Second, you want to provide your basic information (mailing address, phone number, email, and your SSN or your taxpayer ID number “EIN” or “TIN”). Your qualified intermediary is going to need that tax number to open up a separate segregated bank account in which to put your proceeds.

The qualified intermediary typically needs more info than what you’ve given. They will seek out the title/escrow company that’s closing the transaction and request the title report (or title commitment or attorney’s opinion) so they can verify exactly how you’re vested in title, and what the legal description of the property is. So if you know the title/escrow company, provide that information to your qualified intermediary up front.

Open Communication is Key

The most important thing is to communicate openly with your qualified intermediary. If the closing is being moved up a week, let the qualified intermediary know so they can have your documents prepared well in advance of the closing. They need to know of any date changes so they can effectively prepare.

• 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.

© 2022 Copyright Jeffrey R. Peterson All Rights Reserved

The Difference Between Qualified Intermediaries & Real Estate Attorneys

Real estate lawyers and qualified intermediaries play important roles in a 1031 exchange, but there are several important factors to consider in this regard. In this article, we are going to discuss the similarities and differences between qualified intermediaries and real estate attorneys in a 1031 exchange.

Related Parties

First and foremost, it’s important to note the related party’s exclusion in a 1031 exchange. Anyone who has been an agent or employee of the taxpayer conducting the 1031 exchange is not allowed to act as the qualified intermediary for said exchange. So any attorneys who have acted on your behalf or been in your employ during the past two years cannot act as your intermediary.

Two Separate, Essential Roles

Your qualified intermediary and your real estate attorney both play separate, yet essential roles in a 1031 exchange. Your real estate attorney should act as your attorney. Your intermediary, on the other hand, is supposed to act as a neutral third party in the exchange. Make sure to hire a 1031 exchange company that works exclusively in 1031 transactions.

Exchange Your Property with a 1031 

Defer your capital gains taxes on the sale of real estate today with a 1031 exchange. Anyone can conduct a 1031 exchange so long as certain requirements are met. Making sure you meet these technical requirements is essential to the success of your 1031 exchange. With two decades of experience, our intermediaries have the skills needed to manage your transaction from beginning to end. Give us a call today to talk about your 1031 exchange with one of our qualified intermediaries.

• 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.

© 2022 Copyright Jeffrey R. Peterson All Rights Reserved

Can You Be Reimbursed for 1031 Expenses Paid from the Qualified Intermediary?

Can you be reimbursed for expenses paid during your 1031 exchange from the qualified intermediary? That’s a very common question that many taxpayers have when conducting 1031 exchanges of real estate.

Transactional Expenses

Let’s say that during the 1031 exchange process, you had expenses for surveys, appraisals, or other items that you paid for out of your own pocket. Is it possible to get reimbursed for these expenses from the qualified intermediary?

The gain that a person recognizes on a 1031 exchange would be equal to the gained deferral or the boot received (the lesser of the two). If an individual is putting money into their exchange and taking money out of that exchange, you can net those funds for certain transactional expenses.

Here’s how a lot of taxpayers approach this. They have a duplex they want to sell and they spend $12,000 touching up the duplex and getting it ready for sale. When the duplex sells, they want to reimburse themselves for the $12,000 that they had paid in repairs to get it ready for sale. That's where people can get a bit greedy when they want to reimburse themselves for all these expenses.

The Better Play

The better play is to only pay transactional costs that are customarily seen in that locality. If you have an attorney's bill, and accountant’s bill, a real estate agent’s bill, recording fees, etc. – those are the kind of expenses that would be permissible to pay out of the 1031 exchange proceeds.

It is a good idea to involve your attorney and accountant as early in this process as possible. As you can see there are a lot of potential landmines you can step on during a 1031 exchange. Involving your team of professionals as early as possible is the best way to ensure the success of your 1031 exchange.

• 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.

© 2021 Copyright Jeffrey R. Peterson All Rights Reserved