In any 1031 exchange, communication between all involved parties is the key to success. In this article, we are going to discuss why it’s important to communicate effectively with your lender and loan underwriter in a 1031 exchange.
Communicating with Your Underwriter
In a 1031 exchange, some taxpayers try to speak out of both sides of their mouth. They want to tell the IRS that their single-family rental is an investment property, but they want to tell their loan underwriter that it’s their second (or primary) home. This can quickly get dangerous. It’s important to ensure that the loan underwriter has the correct information regarding your exchange. Eventually that loan underwriter will see your closing statement that shows 1031 exchange funds coming in and it’s going to be clear that the property is going to be used for investment or business purposes. If you tell the bank underwriter the wrong information at the outset, they will likely start underwriting your transaction under a different risk parameter. For these reasons, it’s important to be crystal clear with your loan underwriter that you intend to use this property for investment or business means in a 1031 exchange transaction.
Minnesota Qualified Intermediaries
At CPEC1031, LLC we offer qualified intermediary services for 1031 exchanges of real estate. Our team has twenty years of experience facilitating like-kind exchanges in Minnesota and across the United States. We can help you through the entire exchange process, making sure that all of your documents are prepared and that you are meeting all of the 1031 exchange requirements. Contact us today to learn more about our like-kind exchange services and how we can help with your next 1031 exchange of real property.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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