How do I Exchange 1031 Properties?

Choosing a 1031 Exchange method:

A 1031 or tax deferred exchange is the perfect way for property owners to dispose of one property and acquire another without paying any capital gains tax on the transaction. The 1031 tax exchange or tax deferred exchange could save you thousands of dollars!

A forward exchange happens when a property owner disposes of property and then acquires replacement property(ies). The money from the sale is held in trust by a Qualified Intermediary, until acquisition of the replacement property(ies), or until the 180 day time limit has expired.

A reverse exchange occurs with acquisition of the replacement property(ies) before the owner disposes of the original property(ies). This is done at times when the replacement property is closed on before the relinquished property has been sold, and at times to allow the investor to rehabilitate, remodel, or refurbish the replacement property, using funds of the investors or from a loan, and then paying back from funds from the 1031 exchange proceeds from the relinquished property. The Qualified Intermediary holds the replacement property(ies) in trust until the relinquished property(ies) is disposed of, or until the 180 day time limit has expired. Proceeds pay for the replacement property and the rehabilitation.