Top Qualified Intermediaries and Their Qualifications

It's important that you choose a good qualified intermediary in a 1031 exchange, in the same way that you should choose a good realtor.  Both of these advisors can guide you through an exchange smoothly, or cause it to run into obstacles.  And, since extra care needs to be taken in a 1031 exchange transaction, it is best to choose wisely right from the beginning.

An intermediary should first consult with you about your individual situation.  Just like your real estate agent, they will know the particulars of what you are trying to accomplish, and the best way to go about it.  They can then prepare customized documents on your behalf depending on the complexity and specifics of your exchange.

Next, the intermediary will be holding on to your money - the proceeds from the sale of your relinquished property.  Make sure that they are bonded, that they hold the money in a way and with a financial institution that you are comfortable with, and that they can always provide you with an accounting of your funds.  It is also a good idea to use someone who is reputable and has experience in such matters.

The qualified intermediary business is surprisingly an unregulated one, so anyone can set up shop and become an intermediary.  Make sure that you consult with yours, ask any questions to become comfortable, and that the intermediary is always there and able to respond to your needs and concerns, and can guide you through the entire transaction.  We work with many different QIs, and I'd be happy to refer you to one!

45 Day Deadline for Identifying Replacement Property

The time periods involved in 1031 exchanges are pretty strict.  There really is no room for leniency on things, unfortunately!  But, because these property exchanges allow you to save so much and have more capital available to use to invest, it is worth following the rules exactly so that you can get the benefits.

The 45 day rule is the first deadline you will run into on a typical exchange.  From the date that you close on the property that you are selling, you must identify very specifically up to 3 properties that you intend to buy. Either that, or you can identify as many properties as you like as long as the total ask price on all of them is not over 200% of what the sales price was on the one you just sold.  But most people simply identify 3 properties, and begin looking even before they close on the property that they are selling, so that they have a comfortable amount of time in case one goes pending, or is somehow not available.

You must then present this list of 3 properties within 45 days to your qualified intermediary, who is facilitating the transaction on your behalf. On the 45th day, this list is permanent, and you must then close on one of these properties by 180 days after the closing date of the sale of your old property.  I think it is best if you give the list a few days before the deadline, and then make sure that your intermediary got it.  If you email it to them, have them acknowledge it by email you back "Received", so that you have something for your records.  

Welcome!

Welcome to the 1031 Exchange Blog!  This space will be used to share news and information regarding the 1031 exchange process.  Learn why this part of the tax code can be so useful in saving you from paying capital gains tax when you sell an investment property, and choose to purchase a new one.  Each transaction is unique, and each situation different, but many common themes and questions come up.  We will address some of these in upcoming posts.  For now, visit +1031 Exchange to learn more about us.  Thanks for visiting!