How It Works
Understanding the 1031 Exchange Process
Learn how our streamlined 1031 exchange process works to help you defer taxes and maximize your investment potential.
How the 1031 Exchange Process Works
Our streamlined process makes 1031 exchanges simple and efficient. Follow these steps to defer your taxes and maximize your investment potential.
Initial Step: Get in Touch
Contact us as soon as you are planning to sell your property. If you have already executed a Purchase and Sale Agreement—great, we can use that to start your 1031 exchange process. A Qualified Intermediary (QI) is required to handle the transaction to ensure tax-deferred treatment, as receiving cash directly will disqualify the exchange.
Initial Step: Get in Touch
Contact us as soon as you are planning to sell your property. If you have already executed a Purchase and Sale Agreement—great, we can use that to start your 1031 exchange process. A Qualified Intermediary (QI) is required to handle the transaction to ensure tax-deferred treatment, as receiving cash directly will disqualify the exchange.
Close on the Sale of Your Relinquished Property
Once the sale of your relinquished property is completed, the proceeds will be held by a Qualified Intermediary (QI). You now have 45 days to identify potential replacement properties. During this time, you cannot take possession of the funds, as doing so will invalidate the 1031 exchange.
Close on the Sale of Your Relinquished Property
Once the sale of your relinquished property is completed, the proceeds will be held by a Qualified Intermediary (QI). You now have 45 days to identify potential replacement properties. During this time, you cannot take possession of the funds, as doing so will invalidate the 1031 exchange.
45-Day Rule: Identification Period
Within 45 days from the sale of your relinquished property, you must designate your replacement property or properties in writing and notify your Qualified Intermediary. You may designate up to three properties, provided you close on at least one. Additional properties may be designated under certain valuation restrictions.
45-Day Rule: Identification Period
Within 45 days from the sale of your relinquished property, you must designate your replacement property or properties in writing and notify your Qualified Intermediary. You may designate up to three properties, provided you close on at least one. Additional properties may be designated under certain valuation restrictions.
180-Day Rule: Acquisition of Replacement Property
You must complete the purchase of your replacement property within 180 days of the sale of your relinquished property. The identification and acquisition periods run concurrently, meaning if you identify your replacement property on Day 45, you will have 135 days remaining to close on the purchase.
180-Day Rule: Acquisition of Replacement Property
You must complete the purchase of your replacement property within 180 days of the sale of your relinquished property. The identification and acquisition periods run concurrently, meaning if you identify your replacement property on Day 45, you will have 135 days remaining to close on the purchase.
Completion of the Exchange
Once the replacement property is acquired, the 1031 exchange is complete. The Qualified Intermediary will transfer ownership to you, and you will have successfully deferred capital gains taxes under Section 1031.
Completion of the Exchange
Once the replacement property is acquired, the 1031 exchange is complete. The Qualified Intermediary will transfer ownership to you, and you will have successfully deferred capital gains taxes under Section 1031.