The
1031 Exchange Process - Step by Step
Steps
to Complete a Typical Delayed Exchange
There are several types of
1031 exchanges, the process is different for each type.
These are the steps for a delayed exchange, the most common
type of 1031 exchange.
Step
1 - Plan the Transaction. Talk with your Xchange Solutions
facilitator to discuss your transaction. After listening to
your investment objectives we'll determine the best way to
structure your transaction. We'll estimate the amount of potential
capital gains taxes you'll save.
Step
2- Purchase & Sale Agreement. The exchange often begins
with a standard purchase and sale agreement. The agreement
should contain language which establishes the exchanger's
intent to exchange and obtains the buyers consent to cooperate.
Your Xchange Solutions facilitator will convert this "sale"
transaction into an exchange with the use of specialized documentation.
Step
3 - Relinquished Property. Once you have decided to perform
an exchange contact Xchange Solutions immediately. Also notify
all parties to the transaction of your intent to exchange,
including your real estate agent, closing agent, accountant
and attorney.
Xchange
Solutions will collect the information needed to prepare the
exchange documents. The originals will be forwarded to the
closing agent for execution at closing. Copes are sent to
all parties for review. At closing the exchanger will transfer
the relinquished property to Xchange Solutions and Xchange
solutions will simultaneously sell the property to the buyer.
The proceeds are then paid the Xchange Solutions and held
for the acquisition of the replacement property.
Step
4 - Replacement Property. After closing the relinquished
property, the exchanger has 45 days to identify the replacement
property and 180 days to complete the exchange. The exchanger
notifies Xchange Solutions once they have entered into an
agreement to purchase the replacement property. Xchange Solutions
will deliver the documents needed to complete the exchange
to the closing agent. At closing, the property is purchased
by Xchange Solutions and transferred to the exchanger. The
exchange is now complete.
Your exchange
facilitator is available at every stage to answer questions
from your accountant or attorney. We're specialists in these
areas of the local and national tax code so can provide the
expert help they want.
The
Exchangers Funds
Exchanger's funds are deposited into separate and insured
accounts. Because security of the funds is a key concern to
the exchanger, Xchange Solutions provides a variety of security
devices not available through other intermediaries, including
a $15,000,000 fidelity bond per exchange account.
| Ensure
Your Exchange Facilitator is Fully Qualified |
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Meets
the "safe harbor" requirements of a "qualified
intermediary" to insure your 1031 exchange transaction
passes a possible IRS audit. |
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Is
an independent facilitator. This ensures you can work
with the closing agent of your choice. Plus, there is
no risk of agency or related party issues which could
lead to the disallowance of the exchange. |
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•
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Is
a 1031 exchange expert with an understanding of how
the exchange process will effect your real estate transaction.
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Is
available as a resource to your accountant and attorney.
While your accountant and attorney are likely familiar
with 1031 exchanges they will probably have questions
about specific elements of your transaction. Our experience
and knowledge are available free of charge. |
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Audit
proof. Every 1031 exchange transaction completed by
Xchange Solutions which has been audited has held up to
the scrutiny of the IRS. |
Every
situation is unique. If you are planning to sell property
and purchase like-kind property contact
us today or ask our expert
on-line to find out how much you can save by deferring
capital gains taxes.
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