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1031
Exchange
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Phase 1 |
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1.
Do some
planning first, talk with your tax
advisor (before you do the exchange); to determine if
this exchange is practical. Then proceed, you don't have to have your
replacement property selected at this stage.
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2. Complete your purchase & sale agreement just as you would with a regular
sale. We suggest that you add a phrase similar to the "Suggested Earnest Money
Clause" at the back of our procedure manual. |
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3. When your agreement is fully
signed you'll need to take it to the closing agent. (We call this step Opening
Escrow). Make sure you tell the closing agent that this transaction is going to
be a 1031 exchange. If you're using a real estate agent, they will do this for
you. |
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4. Then, notify us about who
is doing the closing. We'll need the name & phone number of the closing agent,
company, and the file number (sometimes called an escrow number). This
information can be sent to us by adding it to the "Setup an Exchange" form, or
by Fax, E-mail, or Telephone. |
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5. We'll then contact the closing
agent, get any additional information we need, set up an Exchange file for you,
process the 1031 Exchange documents, and send the documents directly to the
closing agent. The closing agent will take it from there, and you can sign the
exchange documents along with your other closing documents
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6.
After the exchange sale is complete the closing agent will wire
transfer the proceeds into our trust account. Upon receipt of these funds, and a
copy of the final closing statement, we will send you a letter showing the
amount of proceeds we received (this should be the same as the amount shown on
the bottom of your closing statement). This letter will also include the dates
of the 45 & 180 day periods, and a form to identify your replacement property.
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This is the end of Phase I. - You are now in the 45 day
identification period.
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Phase 2
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1. Before the end of the 45-day identification period, send us a list of the replacement property you wish to identify. This can be
on the form we supplied, or on any other similar written document. You can mail, E-mail, or Fax it to us. Make sure it's fully signed by
each named "Exchanger".
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2. Write & sign your purchase & sale agreement(s) adding the "Exchange Clause" as you did in the first transaction. Again open escrow
as you did in the first transaction; notify the closing agent that this transaction is a 1031 exchange, and that we are your Qualified
Intermediary. The closing agent/company does not have to be the same one that closed the relinquished property.
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3. Again, notify us as to who the closing agent is. Also tell us how much of your proceeds you want to use on this transaction, and
approximately when your purchase will close
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4. We will then contact the closing agent, get any additional information we need, and send the exchange closing documents directly
to the closing agent. After the closing documents have been signed by all parties, the closing agent will send us signed copies, and
we will wire transfer the proceeds into escrow. The closing can then be recorded, and you have completed your exchange.
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5. The closing agent should give you copies of all the documents, including the exchange documents used in your transaction.
When you have closed on the last identified property, or at the end of the 180-day period, your exchange ends and we will return
any unused proceeds. You should try to use all of your proceeds; the returned proceeds are referred to as "boot" and are taxed
on their full amount.
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6. When you file your taxes the form you will use to report your exchange is: IRS form 8824 "Like-Kind Exchanges".
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if you have a property to sell or are kooking to buy as a part of 1031 exchange please fill out this form or call 727-251-4004
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