The IRS statute requires that you use a qualified intermediary (QI) to perform your 1031 exchange. While it is possible for an attorney to provide this service, it doesn’t have to be an attorney and it can’t be an attorney you have utilized for any other matters.
Can an attorney be a Qualified Intermediary?
In some jurisdictions, an attorney can be designated as your Qualified Intermediary, but it can’t be your regular legal counsel — IRS rules state that legal counsel can only act as a Qualified Intermediary if he or she has not performed services for the client in the prior two years unless the work is related to a …
Can you do a 1031 exchange by yourself?
The Use of a Qualified Intermediary is Required
That requirement eliminates the ability of an investor to complete a 1031 exchange without assistance. The qualified intermediary cannot be the investor and cannot work for, be related to, married to, or an agent of the investor.
How do you qualify for 1031 exchange?
The main requirements for a 1031 exchange are: (1) must purchase another “like-kind” investment property; (2) replacement property must be of equal or greater value; (3) must invest all of the proceeds from the sale (cannot receive any “boot”); (4) must be the same title holder and taxpayer; (5) must identify new …
What is the cost of a 1031 exchange?
The direct cost to you in a 1031 exchange typically comes in the form of a fee paid to your QI. QI fees vary, but most reports indicate that a typical deferred 1031 exchange costs between $600 and $1,200. Certain incidental expenses may also be passed on to you.
What banks do 1031 exchanges?
Best 1031 Exchange Companies of 2021
- Best Overall: IPX1031.
- Best Value: First American Exchange.
- Best for Complex Exchanges: Exeter 1031 Exchange Services.
- Best for Tax and Business Planning: Strategic Property Exchanges, LLC.
- Best for Comprehensive Banking Services: Wells Fargo.
- Best for Simple Fee Structure: 1031x.com.
What happens when a 1031 exchange fails?
The advice is generally that your 1031 Exchange has failed and will not qualify for tax-deferred exchange treatment; in short, it’s taxable. … You can dispose of one or more relinquished properties and acquire one or more replacement properties as part of a single 1031 Exchange transaction.
How long must you hold 1031 property?
If a property has been acquired through a 1031 Exchange and is later converted into a primary residence, it is necessary to hold the property for no less than five years or the sale will be fully taxable.
How much time do you have for a 1031 exchange?
To receive the full benefit of a 1031 exchange, your replacement property should be of equal or greater value. You must identify a replacement property for the assets sold within 45 days and then conclude the exchange within 180 days. There are three rules that can be applied to define identification.
Is there an alternative to 1031 exchange?
Qualified Opportunity Zone Funds, allowed under the Tax Cuts and Jobs Act of 2017, are an alternative to 1031 exchange investing that offers similar benefits, including tax deferral and elimination. … This fund option also works if you are selling other appreciated assets, like stocks or businesses.
What is the difference between 1031 and 1033 exchange?
Section 1033 is tax deferral specific to the loss of property by a taxpayer and is therefore is referred to as an involuntary conversion. Section 1031 is the voluntary replacement of either real or personal property in an exchange of business or investment assets.
What is the most common type of exchange?
The forward exchange is the most common and “standard” type of 1031 exchange.
What is a safe harbor 1031 exchange?
The 1991 Treasury Regulations for tax deferred exchanges under IRC §1031 established four “safe harbors,” the use of which allow a taxpayer (Exchanger) to avoid actual or constructive receipt of money or other property for purposes of completing a §1031 exchange.