What is a 1031 Exchange?
Individuals and companies who sell appreciated property (real estate or personal property) are subject to capital gains tax under the Internal Revenue Code. Under IRS’s 1031 Exchange rules, however, an exchange is not considered to be a sale and no capital gain is recognized or subject to tax. The basis of the relinquished property becomes the basis of the replacement property and tax is deferred until such time as the replacement property is “sold.” If the replacement property is later exchanged for another replacement property (not “sold”), tax is also deferred. So, as long as your business, rental or investment properties are disposed of in 1031 Exchanges, the capital gains tax will continue to be deferred.
As Your Qualified 1031 Exchange Intermediary , we lead you through the following steps to successfully complete your exchange:
• Prepare the required exchange agreement between intermediary and exchanger
• Provide notification of the assignments to all parties
• Furnish instructions to settlement agents
• Establish qualified escrow account to hold proceeds from relinquished property
• Receive the 45-day identification notice for replacement property
• Deliver escrow funds for replacement property settlement
• Arrange for direct deeding of the properties
• Provide final accounting