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1031 EXCHANGE
We can provide you with expert guidance to help make your process as smooth and as timely as possible? Let us help you determine if your property qualifies, how and where to submit your forms. Exchanges are extremely technical, and you need a professional guiding you, we are here for you.
Benefits of 1031 Exchanges
- Build, Diversify or Consolidate your Real Estate Portfolio
- Give you additional buying power and additional options to win offers
- Aides investors with flexability in their cash flow
- Defer your Federal and State Taxes (up to 30-40% of your gain)
- The taxes deferred through the process are:
- Federal Capital Gains
- State Capital Gains (except in the commonwealth of Pennsylvania)
- Recapture of Depreciation
- 3.8% Net Investment Income Tax
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Change Property Types to expand your trade or business- we can help you understand your options.
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Retain Greater Purchasing Power and lower your taxable liability.
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Expand into Real Estate using your own cash, saving on interest and PMI
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Become a buyer anywhere in the US, you are not limited to your current state.
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Estate Planning for your Heirs
Are you ready to start the process of a 1031 Exchange,
get started with one of our experts.
1031 EXCHANGE
Section 1031 of the Internal Revenue Code provides an exception from the general rule which requires that gain or loss be recognized on the sale or exchange of the property. The exception is only from the current recognition of gain. When property is disposed of in a subsequent taxable transaction, gain (or loss) is required.
Justification for this exception is based on Congress’ desire to avoid imposing a tax on theoretical gain where taxpayers continued their investment in like-kind property. Congress believed that the taxpayer’s economic interest would not be altered sufficiently to justify taxing them.
Statutory Requirements
To qualify for non-recognition treatment, these requirements must be met:
- An exchange is required
- Qualifying real or personal property must be exchanged
- Property must be held for productive use in a trade or business or for investment purposes
- The relinquished property must be like-kind with the replacement property.
- Property to be received by the taxpayer must be identified on or before the 45th day after the date the taxpayer transfers the property relinquished in the exchange
- Property to be received by the taxpayer must actually be received before the earlier of
- 180 days after the date the taxpayer transfers the relinquished property (no extension for weekends or holidays) or
- The due date (including extensions) for the transferor’s tax return for the taxable year in which the transfer of the relinquished property occurs.
Tax free exchange treatment does not apply to any exchange of:
- Inventory or other property held primarily for resale to customers
- Stocks, bonds or notes
- Other securities or evidence of indebtedness interest
- Interest in a partnership
- Certificate of trust or beneficial interests
- Choses in action
- Real property located in the U.S. for real property located outside the U.S.
- Real property for personal property
- An exchange of livestock of different sexes.
Other Considerations
There are many and varied aspects to Section 1031 Tax-Deferred Exchanges, and you will need knowledgeable and experienced guidance such as that provided by the staff at Coffelt Land Title, Inc.
Contact the Escrow Closing Professional at the office nearest you. (See our list of locations for a complete listing of personnel.)
Fees
| Sales Price | Exchangor Fee |
| $0 to $500,000 | $750.00 |
| $500,001 to $1,000,000 | $1,000.00 |
| $1,000,001 to $1,500,000 | $1,250.00 |
| $1,500,001 to $2,000,000 | $1,500.00 |
| Over $2,000,000 | Add $.50/ $1,000.00 |
The fees listed above cover the costs of preparing documentation and service as Intermediary.
An additional fee of $100.00 per 1031 Exchange Agreement will be charged for setting up an interest-bearing account with the bank of Exchangor’s choice..
An additional fee of $100.00 per month will be charged for servicing the bank account.
*All potential investors should seek advise from their tax consultants about the benefits of utilizing a 1031 Exchange.
Q&A
Can I exchange personal property for real property?
No, real property can be exchange for any real property; land for rental or storage units for parking garage. Personal property is no longer eligible for 1031 exchange effective January 1, 2018.
Can foreign property be exchanged for US property?
No, US property must be exchanged for US property while foreign property must be exchanged for any foreign property.
Can the Earnest Money Deposit for the replacement property be paid from exchange proceeds?
Yes, the EMD can be paid from the proceeds. All that is needed is the amount and wire instructions.
Can I do a partial exchange?
Yes. Whenever considering a partial exchange talk with your accountant to determine whether it is in your interest. There is a point once you get close to removing 50% of the total value (net equity plus debt retired) that it does not make sense to initiate an exchange.