In a 1031 exchange, you need to enter into purchase agreements for the replacement properties into which you intend to exchange. In each purchase agreement you want to include a cooperation clause explaining that you’re doing a 1031 exchange. Once you’ve got that signed you can give that to your qualified intermediary and they will prepare your 1031 exchange replacement documents and interact with the closing company to make sure the closing goes smoothly.
You’ll typically have to sign a replacement property assignment agreement wherein you assign your rights to the qualified intermediary and the qualified intermediary will direct the seller to deed that property directly to you. You will also need to sign a disbursement request or wire transfer authorization to move your funds to the title company for closing. Once closing occurs you own your final replacement property and your exchange is over.
Then you have to talk to your CPA about filing the appropriate forms and report this to the IRS.
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.
© 2022 Copyright Jeffrey R. Peterson All Rights Reserved