How to Handle Holdbacks & Escrows in a 1031 Exchange

Recently, we had a client that owned land that had a bunch of debris and junk on it. The buyer didn’t want to take the property with all of this debris so they required the seller to escrow a bunch of money to assure the buyer that the junk was going to be removed. If you’re going to do this, escrow money out of your own pocket and not out of the 1031 exchange proceeds because you want to have all of your exchange funds immediately available for deployment so they’re ready for closing. Whenever possible, if you have holdbacks or escrows on the sale of the relinquished property, fund those out of pocket rather than sales proceeds. This will alleviate a lot of logistical difficulty.

Jumpstart Your 1031 Exchange

Jumpstart your 1031 real estate exchange today by contacting CPEC1031, LLC. Our qualified intermediaries have over twenty years of experience in the realm of 1031 exchanges. We can help you through the various steps in the 1031 exchange process, answer any questions you have along the way. Reach out to us today at our Minneapolis office to learn more about the process of deferring capital gains taxes with a 1031 exchange. We are headquartered in Minnesota but we facilitate like-kind exchanges throughout the United States.

  • Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

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