1031 Exchange is a Tax-Deferred Transaction

A 1031 exchange, also known as a like-kind exchange, is a tax-deferred transaction allowed under Section 1031 of the Internal Revenue Code (IRC). It enables an investor to sell an investment property and reinvest the proceeds in a new property while deferring the payment of capital gains taxes.

Here is How a 1031 Exchange Works:

1. You sell your existing investment property, known as the relinquished property.
2. You have a 45-day identification period and a 180-day exchange period to complete the exchange. You must identify a replacement property or properties of equal or greater value than the relinquished (Sold) property.
   
3. Within 180 days (or by the due date of your tax return for the year of sale, whichever is earlier) you must close on the purchase of the replacement property or properties.

1031 Exchange Facilitator Manages the Process for You

As your Exchange Facilitator, we work with a Qualified Intermediary (QI) 1031 Advantage Exchange LLC, which plays a crucial role in facilitating a successful 1031 exchange. We act as a third-party intermediary with our Qualified Intermediary, who holds the proceeds from the sale of the relinquished property until the replacement property is acquired. This is necessary to avoid constructive receipt of the funds, which would trigger immediate tax liability.

How Your 1031 Exchange Facilitator can Help During the 1031 Exchange Process:

• Compliance: As your 1031 Exchange Facilitator we ensure that the transaction complies with the strict rules and regulations set forth by the IRS for 1031 exchanges, minimizing the risk of disqualification and potential tax consequences.
• Document Preparation: 1031 Advantage will prepare and manage all necessary legal documents, including the exchange agreement, assignment contracts, and transfer documents, ensuring proper documentation and record-keeping.
• Funds Management: Our Qualified Intermediary will hold and safeguard the sale proceeds from the relinquished property in a qualified escrow account until the replacement property is acquired, avoiding constructive receipt issues.
• Timeline Management: We assist in managing the strict timelines required for identifying and acquiring the replacement property, ensuring that all deadlines are met.
• Tax Reporting: We will work with your CPA or Tax Professionals to provide guidance on tax reporting requirements and to ensure proper documentation and filing of the necessary tax forms.

By working with an experienced 1031 Exchange Facilitator, you can navigate the complexities of a 1031 exchange more efficiently, minimize the risk of disqualification, and potentially defer significant capital gains taxes.