In any 1031 exchange, there are many professionals who have a role to play – from the qualified intermediary, to the exchangor’s CPA, and more. In this article, we’re going to discuss the role of one specific professional in a 1031 exchange – the real estate agent.
What Does a Real Estate Agent Do in a 1031 Exchange?
A real estate agent can fulfill many tasks that a taxpayer may not even consider when doing a 1031 exchange. Here are a few actions a real estate agent can take on your behalf:
List the property to be relinquished and communicate that the seller will be conducting a 1031 exchange. They may add a special note in the listing to state seller will be conducting a 1031 exchange.
Market the property to be relinquished for sale. Find a suitable buyer and solicit offers for the sale. Cash offers are preferred in 1031 exchanges; and installment sales or seller financing is not as easy to accommodate in a 1031.
Add an affirmative 1031 cooperation clause to the relinquished property purchase agreement that Seller intends the transaction to be part of a 1031 exchange through a qualified intermediary.
Coordinate and communicate with the title company or law firm and qualified intermediary that is closing the relinquished property closing.
Ensure that the net proceeds from the closing of the relinquished property are directly sent to the qualified intermediary and not to the seller.
Help the client navigate the 45-day identification period and the 180-day exchange period. Know the intricacies of various rules and be able to help the client make the best use of the rules to maximize the possibility of successfully completing a 1031.
Locate and present suitable like-kind replacement properties for the client.
Negotiate the purchase offer with the seller of the replacement properties. Again, you may want to add an affirmative 1031 cooperation clause to the purchase agreement that Seller intends the transaction to be part of a 1031 exchange through a qualified intermediary.
Coordinate with the title company for the timely closing of the Replacement Property.
CPEC1031
If you have questions about the role of a real estate agent in a 1031 exchange, contact CPEC1031. Our team of qualified intermediaries have been facilitating 1031 exchanges of real estate for more than twenty years. We can help you through the process and help you defer capital gains taxes. Contact us today at our downtown Minneapolis office!
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.
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