1031 Exchange Agreement Form In Santa Clara
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FAQ
A 1031 exchange does not obviate the need for a realtor. Quite to the contrary, in most cases an Exchanger has an even greater need for a realtor due to the time constraints placed on Exchangers.
How do you report Section 1031 Like-Kind Exchanges to the IRS? You must report an exchange to the IRS on Form 8824, Like-Kind Exchanges and file it with your tax return for the year in which the exchange occurred.
A Qualified Intermediary, or QI, is an independent third party to the transaction whose function is to prepare the documents necessary to create the exchange, as well as to act as the independent escrow agent for the exchange funds.
Under § 1031(f)(1), a taxpayer exchanging like-kind property with a related person cannot use the nonrecognition provisions of § 1031 if, within 2 years of the date of the last transfer, either the related person disposes of the relinquished property or the taxpayer disposes of the replacement property.
Lack of Liquidity- Exchanging properties continually can tie up funds in real estate, making it hard for an investor to access liquid capital if required. While real estate can be a profitable investment, it's not as liquid as some other assets.
What Is a Qualified Intermediary? Qualified Intermediary (QI) is someone a property seller selects to oversee the 1031 exchange process and its funds. They hold the funds from the previous property and use them to acquire the new replacement property to ensure compliance with IRS regulations.
How to Do a 1031 Exchange Choose a qualified intermediary to coordinate the exchange. Sell your current real estate property. You have 45 days to identify potential replacement properties. You have 180 days to close on a replacement property. File IRS Form 8824.
While it may be tempting to ask your CPA to act as your Qualified Intermediary, a CPA cannot facilitate a 1031 exchange between investors. Under IRC Section 1031 guidelines, CPAs, attorneys, investment bankers, and real estate agents/brokers fall under the 'agent' category.