If you are considering a 1031 exchange, you may ask yourself if you need to include a cooperation clause in your purchase agreement. That’s a great question – read on to learn more about cooperation clauses in 1031 exchange transactions.
The Benefits of a Cooperation Clause
The short answer is that a cooperation clause in your purchase agreement is not mandatory, but it is a best practice in a 1031 exchange. Including a cooperation clause in your purchase agreement can save you time, money, and anxiety because it protects both sides of the deal.
If you are the seller in a 1031 exchange, a cooperation clause informs the buyer:
You are doing a 1031 exchange
Your rights will be assigned to a 1031 intermediary
The buyer will sign an acknowledgement that they have received notice of these intentions
On the flip side, if you are the buyer in a 1031 exchange, a cooperation clause informs the seller:
You are completing a 1031 exchange
Your rights will be assigned to a 1031 intermediary
The seller will have to cooperate with the 1031 exchange process and sign an acknowledgement that they have received notice of the buyer’s intention to conduct a 1031 exchange
Anyone Can Defer Taxes with a 1031 Exchange
Any United States taxpayer that owns qualifying real estate can conduct a 1031 exchange and defer their capital gains taxes on the sale. Section 1031 has been part of the tax code in one form or another for a hundred years. Take advantage of the tax saving benefits of section 1031 by contacting a qualified intermediary at CPEC1031, LLC to learn more about the like-kind exchange process and get started. We have more than twenty years of experience facilitating exchanges of real property across the country.
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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