Can You Do a 1031 Exchange Without a Qualified Intermediary?

1031 exchanges and qualified intermediaries go together like Peanut Butter and Jelly. But does that mean that you need to hire a qualified intermediary for your exchange? In this article, we are going to talk about whether it’s necessary to hire a qualified intermediary for your 1031 exchange of real property.

In Most Cases

The short answer to the question of whether or not you need a qualified intermediary for a 1031 exchange is – in most cases. Most 1031 exchanges follow the safe-harbor protocol that requires the use of an intermediary.

Your qualified intermediary is essential to the process because they (among other things) hold your exchange funds for you while you wait for the process to complete. This keeps you from receiving boot and recognizing any gain during the process.

In addition to that, it’s advantageous to hire an intermediary because they act as your guide through the 1031 exchange process. Like-kind exchanges can be complex and there are many common traps for the unwary. Having an intermediary by your side is the best way to ensure your exchange will be a success.

Rare Exceptions

There are a few rare 1031 exchange cases in which a qualified intermediary is not necessary, but these are very uncommon.

CPEC1031

A qualified intermediary is your best bet for completing a successful 1031 exchange transaction. At CPEC1031, our intermediaries can help you prepare your 1031 documents, answer your questions, and advise you on the appropriate replacement property. With more than twenty years of experience, we have the skills needed to ensure that your exchange completes without any issues. Contact us today at our downtown Minneapolis office to learn more about our services and set up an appointment with one of our 1031 professionals!

• 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved

Qualified Intermediary – the Most Important Member of your 1031 Exchange Team

When conducting a 1031 exchange, there are several professionals you want to include in your 1031 exchange “team.” In this article, we are going to explain why a qualified intermediary is the most important person to have on your 1031 exchange team.

A Qualified Intermediary Can Walk You Through the Process

A qualified intermediary is a professional who specializes in all things related to 1031 exchanges. They can walk you through the entire 1031 exchange process, offering you advice and insight every step of the way.

A Qualified Intermediary Can Hold Your Net Proceeds

During a typical 1031 exchange, you need to move all of your sales proceeds into your replacement property in order to defer 100% of your capital gains taxes. If you receive any of these sales proceeds during the 1031 exchange process, you will be liable for capital gains taxes on those proceeds. A qualified intermediary can hold these proceeds for you so you can avoid this taxable “boot.”

Contact a Qualified Intermediary in Your Area

If you are hoping to save money on capital gains taxes when selling a piece of investment real estate, section 1031 of the Internal Revenue Code is the tool for you! When conducting a 1031 exchange, it’s important to work with a qualified intermediary who understands the process inside and out. At CPEC1031 our intermediaries have two decades of experience facilitating exchanges. We have the knowledge and experience needed to explain the entire process to you and make sure your goals are met. Contact us today to learn more about how we can help you save money in capital gains taxes!

• 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

Here’s How to Choose a Qualified Intermediary for Your 1031 Exchange

Choosing the right intermediary for your like-kind exchange is essential for the success of your exchange. Making a poor decision can potentially result in a failed 1031 exchange. But a lot of people don’t know what to look for in a qualified intermediary. In this article, we’re going to explain how to choose a qualified intermediary for your 1031 exchange.

Successful Track Record

Experience goes a long way in the 1031 exchange industry. An experienced intermediary will likely be better at avoiding pitfalls than an intermediary who is green under the gills. Look for an intermediary who has been facilitating exchanges for a long time. You should also ask about your intermediary’s track record of completing successful exchanges.

Support Staff

You also want to make sure that your intermediary has a strong support staff as they will likely be interfacing with you and working on your transaction behind the scenes.

Bond Coverage & EO Insurance

Your intermediary will be holding on to your exchange funds for a portion of time during the exchange process. Because of this you should make sure that your intermediary has bond coverage and EO insurance so that you can rest assured that your money is in safe hands.

Minneapolis Qualified Intermediaries

If you’re searching for a qualified intermediary in the Minneapolis area, you’ve come to the right place. At CPEC1031, we have over two decades of experience facilitating like-kind exchanges of real estate. Our qualified intermediaries can help you through each and every aspect of your 1031 exchange – from selling your relinquished property, to identifying replacement properties, and more! Contact us today at our downtown Minneapolis office or at one of our satellite offices around the United States.

• 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

Why a Qualified Intermediary is Essential in a 1031 Exchange

Your qualified intermediary plays several crucial roles in a 1031 exchange. In this article, we are going to talk about why a qualified intermediary is an essential element in any 1031 exchange of real estate.

Documents

There are a lot of documents required in a 1031 exchange. Making sure you have all the required documentation can be daunting for the uninitiated. An intermediary can not only ensure that your documents are in order – they can draw them up for you!

Keeping Your Exchange Funds Separate

In a 1031 exchange, you need to keep your net proceeds separate at all times to avoid constructive receipt (which can trigger boot). The best method for doing this is to have your intermediary hold the exchange funds in a segregated bank account until you are ready to reinvest them into the replacement property.

Peace of Mind

Having a qualified intermediary by your side will also give you peace of mind. You can rest assured knowing that your exchange is in good hands and that all the necessary requirements are being met.

1031 Exchange Tax Deferral

Complete your 1031 exchange today to defer your capital gains taxes on the sale of real estate. Contact the qualified intermediaries at CPEC1031 for guidance through the like-kind exchange process. With more than two decades of experience, our intermediaries can answer any lingering questions you have, advise you on suitable replacement properties, and prepare your 1031 documents. Reach out to us today at our downtown Minneapolis office to set up a time to chat with a 1031 exchange professional.

• 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.

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

When to Involve a Qualified Intermediary in Your 1031 Exchange

Recently, a client came to us with the following question:

"We have the property to be relinquished on the market and I am in the final steps to get the property I will be buying under contract. Do I need to send anything to the qualified intermediary before I sign the purchase agreement on the new property?"

Involving a Qualified Intermediary

Good question! No, the intermediary does not need anything prior to your signing the purchase agreements. Intermediaries typically get involved once a purchase agreements is signed and the title process is getting started (prior to closing).

Once you have them, send a PDF copy of the signed purchase agreements and customer application form completed (to the extent possible) to your intermediary to get started with the 1031 exchange process. You may also want to include our sample text into your purchase agreements, and let your title-closers know that you are doing a 1031 exchange.

Exchange Your Property

CPEC1031 works with taxpayers large and small on the exchanging of real estate under section 1031 of the Internal Revenue Code. With twenty years of experience under our belts, we can answer all of your questions, advise you on replacement properties, and prepare all of your needed documentation throughout the course of your exchange. Reach out to us today to learn more about our 1031 exchange services and get your exchange off the ground today. Our office is located in downtown Minneapolis, but we work with clients across the United States.

• 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.

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved