Property Portfolio     |     Turn Key Solutions     |     Benefits of a TIC     |     Request Information
     Sell Us Your Property     |     Sell Your TIC Interest     |     IRA's & Pension Plans     |      Trust Management Services     |      Qualified Realtors®
     Archives     |      Links     |      Glossary     |      FAQ     |      No Cost 1031 Exchange     |      Calculators     |     CE Courses
     Sales Commissions     |     See Properties     |     TIC MLS     |      TIC’s as Real Estate     |      Request Info
     Our Philosophy     |     Our Team     |      Past Properties     |     Request a Brochure     |     Ask an Advisor     |     Agent Directory
4.jpg

How do I perform a Tax Deferred Exchange?

In order to legally exchange 1031 properties, the services of a skilled and experienced qualified intermediary are essential.

Basic steps to a forward 1031 exchange of properties:

  1. The owner of property (taxpayer) contracts with a 1031 Qualified Intermediary (QI) company to assist with the exchange,
  2. A taxpayer sells a real property and the QI provides all necessary documents to the title or closing company,
  3. The taxpayer assigns the property and it's proceeds to the QI who then holds the proceeds in a trust account,
  4. The taxpayer identifies replacement properties of like-kind within the 45 day deadline stipulated by the IRS code,
  5. Purchase is made of qualified replacement property(ies) within the 180 days stipulated by the IRS code,
  6. The QI firm has the funds wired out to the closing agent to complete the transaction, and then the replacement property transfers to the taxpayer.

In order to exchange investment properties legally, careful adherence to the requirements of Section 1031 is important in maintaining the tax-free status of the transaction. The sale of the relinquished property and the subsequent reinvestment in replacement property can qualify as a trade or exchange by means of an exchange agreement and the services of a qualified intermediary.

Reverse Exchanges, including repair or rehabilitation of the replacement property, or purchasing of the replacement property before selling of the relinquished property, require the services of a QI, also, and usually financial loan services. Some QI services provide a financial loaning service, also. The basic steps to a reverse exchange differ from the forward exchange in that the replacement property is purchased first, and possibly rehabilitated. The 45 day and 180 day periods begin when the relinquished property is sold, as in the forward exchange. A reverse exchange usually costs more because there is more work and oversight involved by the QI, and because financing must usually be obtained to purchase the property before funds have been received from the relinquished property and for the expenses of rehabilitation. These can be paid from the sale proceeds of the relinquished property once it has been disposed of.

RealtyNet Advisors can refer you to good 1031 exchange companies to help you complete your exchange in a cost-effective manner which complies with the IRS code. Contact us and we'll send you a 24-page pamphlet entitled "Section 1031 Tax Deferred Exchanges in a Nutshell."

RealtyNet Advisors is a commercial real estate brokerage firm that can assist in locating, negotiating and acquiring triple-net lease real estate for a tax deferred exchange. We maintain a database of properties located throughout the United States, so when a buyer needs to locate property that meets his or her particular circumstances, we can help immediately.

For more information, please email us at info@realtynetadvisors.com or call us at 800-872-1031.