2 Roles that a Qualified Intermediary Fills in a 1031 Exchange

A qualified intermediary wears many hats in a 1031 exchange, but many people aren’t fully aware of what a qualified intermediary even does. In this article, we are going to discuss two roles that a qualified intermediary fills during the course of a 1031 exchange.

A Trusted Advisor

First and foremost, a qualified intermediary is a trusted advisor to the taxpayer conducting the 1031 exchange. You can (and should) go to them with any questions you have during the like-kind exchange process. They can also advise you on identifying appropriate replacement property.

A Neutral Third Party

A qualified intermediary also has to act as a neutral third party. In a 1031 exchange, it’s important that the taxpayer conducting the exchange does not acquire any of the net proceeds from the sale of the relinquished property. The qualified intermediary can hold onto these proceeds as a neutral third party until it comes time to redeploy these assets into the replacement property.

Minnesota Qualified Intermediaries

CPEC1031 employs skilled and experience qualified intermediaries who can help facilitate your next real estate exchange. We have been providing like-kind exchange services to our clients for over two decades. We put that level of experience to work on each transaction we facilitate. Contact us today to learn more about the 1031 exchange process and how we can help you through your next 1031 exchange. You can find us at our primary office located in downtown Minneapolis or at one of our satellite offices located around 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved

How 1031 Exchanges Impact the Seller

We talk a lot about 1031 exchanges from the buyer’s perspective. In this article, we’d like to turn the tables and take a look at things from the seller’s perspective.

1031 Considerations for the Seller

If you are selling a property and you discover the buyer intends to involve the property in a 1031 exchange, there are a few things you should add into your contract. Specifically, it’s important to include language that:

• you're aware of the buyer's intent to complete a 1031 exchange,

• you agree to cooperate at no additional cost or liability to you, and

• you're aware that the buyer has certain rights assigned to a third party (the qualified intermediary).

This type of verbiage is essential to include in the contract so every party is on the same page that the property will be involved in a 1031 exchange.

1031 Timelines

It’s also important to be aware of the timelines that govern 1031 exchanges. If your buyer intends to acquire your property in a 1031 exchange, they must acquire the property within 180 days of selling their relinquished property. This may impact your closing date so it’s important to keep in mind.

1031 Exchange Company

CPEC1031 is a 1031 exchange company with twenty years of experience in the like-kind exchange industry. Our qualified intermediaries are ready and able to help you with your 1031 exchange – no matter how simple or complex. Contact us today to learn more about our range of services and how we can help you save money when selling investment real estate. Our main office is located in downtown Minneapolis, but you can reach us across the country at one of our numerous satellite offices as well.

• 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved

Where to go for Help with Your 1031 Exchange

If you’re just starting down the path of a 1031 exchange, it can be tough to figure out where to start. In this article, we are going to talk about a couple of places to turn to for help with your 1031 exchange.

The Internet

The first place most people turn to when they’re trying to learn more about something is the internet. Pull up your favorite search engine and search for “1031 exchange” and you’ll get over 25 million results. This is a decent place to start when you’re trying to learn the basics of how 1031 exchanges work. However, tread cautiously into these waters as there is a lot of inaccurate information out there on the web when it comes to 1031 exchanges.

A Qualified Intermediary

Getting information directly from a qualified intermediary is your best bet. Qualified intermediaries are specialists in section 1031 of the Internal Revenue Code. They can answer all your questions about 1031 exchanges and advise you on your specific situation.

Get Help with Your 1031 Exchange

Looking for help with your 1031 exchange? You’ve come to the right place. At CPEC1031, we have more than two decades of experience facilitating exchanges of all types. Our qualified intermediaries can help you through each step in the 1031 process and make sure you have everything prepared for the closing table. Contact us today to learn more about our services and how we can help. Our primary office is located in downtown Minneapolis.

• 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved

How Title Closers & Qualified Intermediaries can Work Together on 1031 Exchanges

Many title closers run into clients who ask about 1031 exchanges. It’s important for closers to have some knowledge of the 1031 exchange process so that they can better help their clients prepare for the closing table. In this article, we’re going to talk about how title closers and qualified intermediaries can work together on 1031 exchanges.

Understand the Ultimate Goal of a 1031 Exchange

Remember that the ultimate goal of a 1031 exchange is to reinvest all of the sales proceeds from the relinquished property into the replacement property. The taxpayer should not pocket any of the net proceeds from the sale.

Pay Attention to 3 Specific Items

When it comes to 1031 exchanges, there are three specific items you want to keep an eye out for on the closing sheet – taxes, rent prorations, and security deposits. It’s important that the seller pay these items out of pocket in order to keep things clean from a 1031 perspective.

Work with a Qualified Intermediary

It’s best to consult with a qualified intermediary when dealing with a 1031 exchange to avoid any potential issues. At CPEC1031, we make the 1031 exchange process as easy as possible for you by taking care of everything. Our qualified intermediaries have been facilitating exchanges for over two decades and have the knowledge and experience to ensure the success of your exchange. Contact our team today to discuss your next 1031 exchange. You can find us at our primary office located in downtown Minneapolis, or at one of our satellite offices around 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved

How to Deal with 1031 Exchange Purchase Agreements

Recently, we had a client who was working on writing a Purchase Agreement for a piece of real estate and they wanted to know who to enter as the buyer for 1031 exchange purposes. Also, the PA stipulated that an initial deposit was to be submitted within a few days of an accepted offer - where should this payment come from? 

Shout it From the Mountaintops

Typically, the taxpayer/exchangor conducting the exchange enters into the Replacement Property purchase agreement in the same way that he/she owned the Relinquished Property and includes a 1031 cooperation clause in the purchase agreement.

It is a very prudent practice to ‘shout it from the mountaintops’ at every juncture that you intend to conduct a 1031 exchange. That way if there is ever a misstep, mistake or problem, everyone knows what you are trying to accomplish, and will give you the benefit of their understanding.

Here is some sample text that you may use or adapt for your purchase agreements:

When Buying: (Replacement Property)

The Seller herein acknowledges that it is the intention of the Buyer to complete an IRC Section 1031 Tax-Deferred Exchange and that the Buyer's rights under this Purchase Agreement shall be assigned to CPEC1031, for the purpose of completing such exchange. However, any warranties that may be expressed in this contract shall remain and be enforceable between the parties executing this document.  Seller agrees to cooperate with the Buyer and/or its assigns in a manner necessary to complete said exchange at no additional cost or liability. This Purchase Agreement is part of an integrated, interdependent, mutual and reciprocal plan intended to effectuate an exchange by Buyer of a like-kind real properties pursuant to and in accordance with the provisions of Section 1031 of the Internal Revenue Code.  The Seller shall execute and provide to Buyer prior to closing, an acknowledgement, that Seller has received written notice of the assignment of the Buyer’s rights under this Purchase Agreement to CPEC1031.

Contact a 1031 Exchange Professional

1031 exchanges of real estate are a great way to defer capital gains taxes. It’s important to ensure that you meet the requirements set out in IRC section 1031, however. The best way to ensure that is to work with a qualified intermediary who knows the process and can help advise you every step of the way. At CPEC1031 we have over two decades of experience facilitating exchanges of all shapes and sizes. Let us put our experience to work on your next 1031 exchange!

• 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved