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Our team of 1031 Exchange experts offer proven solutions to enhance our client’s goals of preserving equity and building their real estate investment portfolios.
Our team of 1031 Exchange experts offer proven solutions to work with you and your tax advisors to make sure exchanges are as seamless as possible. Learn more about our expertise and service offering.Learn More Here
From understanding if your property qualifies to when you need to submit all your paperwork, 1031 Exchanges are technical and complicated. Learn more about the details of an exchange in our Resource Center.Read More Here
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Benefits of a 1031 Exchange
Between improving buying power, giving investors flexibility, and increasing purchasing power, there are a lot of benefits to taking advantage of a 1031 Exchange.
About 1031 Exchanges
Looking for an answer about your exchange? Search our knowledge base of frequently asked 1031 Exchange question and answers.
The 1031 Exchange, also known as a tax-deferred exchange, comes from IRC section 1031, which was written back in 1921. This tax code allows taxpayers to exchange property held for business use or investment purposes for other like-kind property. As long as the taxpayer meets the necessary requirements, the taxpayer will not recognize the gain from the sale of the asset.
Tax rules require that a taxpayer enlist the assistance of a Qualified Intermediary (QI) for their 1031 transaction. The QI will fill two roles in the transaction. First, they will prepare documents before the sale of the relinquished property and they will also document the replacement property closings. Second, the QI will hold the funds on behalf of the client during the exchange. The QI will disburse funds for the acquisition of the replacement property and if there is a balance after the purchase, the QI will return the unused funds to the taxpayer at the end of the exchange period.
In the 1031 process, taxes are only deferred, not eliminated. You will eventually need to pay your taxes when you sell your replacement property and do not do another 1031 exchange.