What is a 1031 Real Estate Exchange?
Section 1031 of the International Revenue Code allows a property owner to exchange investment property for other for other investment property and defer payment of federal and state capital gains taxes. Properties must be held for investment or for business.
Section 1031 allows continued deferral of taxes on subsequent exchanges, allowing the owner to increase equity without the burden of capital gains taxes. Selling one property followed by the purchase of another can be a 1031 exchange. However, funds must be kept by a qualified intermediary (that’s us) and certain time requirements need to be met.
For example, a commercial building in Georgia can be exchanged for farmland in Nevada. A condo in Virginia can be exchanged for a rental house in Texas.
Property owners can realize their investment goals. By exchanging properties instead of selling for cash, owners can consolidate or diversify their holdings, improve cash flow, or reduce management commitments. Our procedure is designed for simplicity, accuracy, speed, and safety at a reasonable cost. The exchange is managed in accordance with the IRS rules and regulations.
Simple Steps to Follow
You (or your real estate agent) fax the sales contract and title insurance commitment to us at 904-992-8827. Using these documents,
we draft an Exchange Agreement between our company and you. We forward this Exchange Agreement to you for your review and approval. You then return the signed Exchange Agreement to us. Hetsler Mediation & Valuation, Inc. holds the funds from the sale safely in a qualified exchange account. IRS regulations require that you not have actual or constructive receipt of the sale proceeds.
You have 45 days to identify replacement property on a form that we provide. You have 180 days from the sale of the relinquished property to close on the replacement property. You give us the purchase contract and closing agent’s contact information and we provide the exchange proceeds at the time of purchase.
What Do I Do Next?
Call us as soon as possible, definitely before any closing. Then begin searching for replacement property. Let us guide you through the exchange.
How Much Will a 1031 Exchange Cost?
$500 for simple exchange (1 sell & 1 buy), $200 for each additional purchase.
$3,500 for reverse exchange without an outside lender.
$4,500 for reverse exchange with an outside lender.
We provide 1031 exchange services
nationwide.
