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1031 Tax Deferred Exchange Basics
In a 1031 exchange (A.K.A. like kind exchange), an asset - typically real estate - is sold and the proceeds are then reinvested in a "like kind" asset.
By conducting this exchange, the individual will not recognize any losses or gains as per Section 1031 of the Internal Revenue Code. Capital gains taxes are deferred until property is sold and not exchanged.
- The exchanged property must be identified within 45 days
- All proceeds of the initial sale must be re-invested in the like kind property within 180 days of that sale.
- When exchanging property, you must do so if like kind. Real property has to be exchanged with real property, not personal property.
- 1031 Exchanges can only take place with investment property, commercial property, personal property or trade property (no personal residences)
- Section 1031 does not apply to exchanges of inventory, stocks, bonds, notes, other securities or evidence of indebtedness, or certain other assets.
Qualified Intermediaries exist to help individuals and businesses execute 1031 exchanges of all kinds.
1031 Exchange Example
An investor decides to sell a four-plex for $200,000 that he purchased 5 years ago for $100,000. If he invests the $200,000 in another investment property -- say a 10-plex -- through a 1031 exchange, he will not have to pay any capital gains taxes on it after the sale.
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1031 Qualified Intermediaries
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- 1031 Exchange Services, Inc.
Rhode Island based qualified intermediary and member of the Federation of Exchange Accommodators (FEA)
- 1031 Real Estate Services, Inc.
National qualified intermediary specializing in tax-deferred 1031 exchanges and a member of the FEA (Federation of Exchange Accommodators)
- All States 1031 Exchange Facilitator, LLC
National Qualified Intermediary for Internal Revenue Code Section 1031 Tax-Deferred Exchanges.
- Asset Preservation, Inc. (API)
Qualified Intermediary with over 120,000 1031 exchanges executed
- Atlantic Exchange Company, LLC
National Qualified Intermediary that can handle any type of like-kind exchange for any type of real or personal property
- Exeter 1031 Exchanges Services, LLC
1031 Exchange Qualified Intermediary administering forward, reverse and improvement tax-deferred exchange strategies.
- Investment Exchange Group, LLC (IXG 1031)
National Qualified Intermediary (QI) specializing in 1031 real estate exchanges, including complex reverse, construction and personal property exchanges
- Southwest Exchange Corporation (SEC)
Independent Qualified Intermediary serving investors throughout the United States.
- Starker Services, Inc.
Starker Services, is the nation's oldest independent Qualified Intermediary firm, supporting all types of tax deferred 1031 exchanges
- TransUnion Exchange Corporation
The credit reporting agency is now in the business of providing tax-deferred, like-kind 1031 exchange services, including forward & reverse exchanges
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