4 Steps For Initiating Your 1031 Exchange

To initiate an exchange, the investor must decide that exchange must be made prior to closing of the relinquished property. The exchange agreement must be in place and delivered to all parties before the relinquished property transfer of title. There are several steps on how to initiate an exchange.

STEP 1

First, you must find an experienced professional Qualified Intermediary to assist you with the exchange as early in the sale process as possible. In finding a Qualified Intermediary, you should consider that he/she is knowledgeable and experienced staff; the local assistance for your real estate agent, CPA and attorney; and especially the safety of your funds. You also require the Qualified Intermediary to provide fidelity bond insurance coverage.

STEP 2

Instruct your real estate agent to include an Exchange Cooperation Clause as a supplement to the purchase and sale agreement on the relinquished property. An example of Exchange Cooperation Clause is when the buyer hereby acknowledges that it is the intent of the Seller to affect an IRC 1031 tax deferred exchange which will not delay the closing or cause additional expense to the buyer. The seller?s rights under this agreement may be assigned to Investment Property Exchange Services, Inc., a Qualified Intermediary, for the purpose of completing such an exchange. Buyer agrees to cooperate with the seller and Investment Property Exchange Services, Inc. in a manner necessary to complete the exchange.

STEP 3

Contact your Qualified Intermediary as soon as possible after escrow is opened or after entering into the purchase and sale agreement and advise them of your intent to do an exchange well in advance of the closing date. The Qualified Intermediary will draft the appropriate Exchange Agreement, Assignments and Exchange Closing Instructions that must be executed prior to closing on the property being sold.

STEP 4

You must start searching for acceptable replacement property immediately to insure that you can meet the strict time frame for the 45-day identification period. 

Begin the Exchange Process

Preparation is the name of the game when it comes to 1031 exchanges. If you have a piece of real estate that you’re considering for 1031 exchange, get the ball rolling as soon as possible by consulting with a qualified intermediary. The intermediaries at CPEC1031 have more than two decades of experience helping people through their like-kind exchanges. We can put that experience to work on your exchange. Give us a call today at our downtown Minneapolis office to learn more about the services we provide.

• 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.

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

How to Open an Order for a 1031 Exchange

We have written previously about the information you need to compile if you’re thinking about starting a 1031 exchange. But if you know you want to do a 1031 exchange, and you have your initial information ready, you can open an order and get the process going. In this article, we are going to discuss how to open an order for a 1031 exchange.

Information Needed to Open an Order

Here is the information your qualified intermediary will need to open an order and begin your 1031 exchange:

• Exchangor(s) name(s) and information (location, email, SSN, etc.)
• Relinquished property information (address, closing date, sale price, etc.)
• Relinquished property realtor information (name, address, phone, email)
• Title company information (name, address, phone email)
• Accountant or Attorney information (name, firm, address, phone, email)
• Replacement property information
• Replacement property realtor information

If you are interested in opening an order of your own, fill out our open an order form and one of our qualified intermediaries will get back to you about the initial steps for starting your 1031 exchange.

Contact a Qualified Intermediary

The most important first step in any 1031 exchange is contacting a qualified intermediary who can take a look at your situation and advise you on how to proceed. A skilled 1031 intermediary can answer all of your questions, prepare your 1031 documents, and make sure your exchange is successful. The qualified intermediaries at Commercial Partners Exchange Company have been helping taxpayers throughout the country with their exchanges for several decades. If you want to learn more about the tax saving benefits of section 1031, contact us today at our downtown Minneapolis office.

• 1031 Hotline: If you have questions about how to open an order for a 1031 exchange, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2017 Copyright Jeffrey R. Peterson All Rights Reserved

How to Start a 1031 Exchange

There are many steps involved in executing a 1031 exchange. In this article, we’ll walk you through all the steps you need to take for a successful 1031 exchange.

Send Your Information to Your QI

The first thing you need to do is provide your Qualified Intermediary (“QI”) with the key details and information about your transaction so they can draft the 1031 documents. Send your QI all of the following:

• The name of the title company closing the transaction

• A copy of the purchase agreement

• A copy of the title report

• The basic 411 on the seller conducting the exchange (sometimes an individual, sometimes a business entity, including the FEIN or SSN).

Document Preparation

Next, the qualified intermediary will gather all of this information, and prepare your 1031 documents and the closing instructions for the title company so they know what needs to be signed at closing. Often the QI will get you to sign your 1031 documents prior to closing and the QI will instruct the title company to have the buyer of the relinquished property sign an acknowledgement stating that they were given notice that the seller is conducting a 1031 exchange. Further, the QI will instruct the title company on how to prepare the closing statement, what to do with the closing proceeds (i.e. wire them in a separate escrow account). The Title Company and QI are doing a lot behind the scenes to make sure the closing is drama free.

Deadlines

Once the closing occurs, you no longer own the relinquished property and your timelines for the 45 day and 180 day periods begin. Closing is day zero, and you have 45 days to designate in writing your replacement property. Once you find a replacement property you will fill out a form with your QI to identify them in writing and transmit that ID form to that QI. The QI will then sign, stamp and date that form and send it back to you for your records. Your CPA is going to want to know when you identified so they can fill out form 8824 – the worksheet you need to include with your tax return.

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

Defer the tax. Maximize your gain.

© 2016 Copyright Jeffrey R. Peterson All Rights Reserved