1031 Exchange Info

When embarking upon a 1031 property exchange, it is best to have all relevant and necessary information on hand and easily accessible. It is also a wise move to review and at least become familiar with the IRS rules and procedures that govern the 1031 exchange laws. It is vital to understand the IRS rules. Also, a little planning can go a long way. You should calculate your tax exposure and decide if the exchange is even a practical choice for you.

When assembling information that is necessary for a 1031 exchange, have this basic information on hand:

*The address of the relinquished property *A detailed description of the relinquished property *The name of all buyers *The name and contact information (address, phone and email address) of the real estate broker who is handling the property *The name and contact information (address, phone and email address) of the closing agent as well as the closing company *The escrow file number it that is available *The approximate date of closing

Once you locate and designate a replacement property and are ready to set up that aspect of the exchange, you will need this information:

*The address of the replacement property *A detailed description of the replacement property *The name of the sellers *The name and contact information (address, phone and email address) of the real estate broker *The name and contact information (address, phone and email address) of the closing agent and the closing company *The escrow file number if it is available *The approximate date of closing *The amount of proceeds that you wish your 1031 Exchange company to us for the purchase of the property

While the 1031 exchange company is able to move the exchange along from their end and process the necessary documents once they have the information that is required from the closing company, the flow and speed of the transaction is handled by the real estate brokers or the escrow closing agent.

It is up to either one or both of these entities that determine how quickly and easily the transaction will proceed. That is why it is vital to take care in selecting a real estate broker and an escrow closing agent.

It is advisable to allow a reasonable amount of time between the closings of the relinquished property and the replacement property. This 5 to 7 day period will allow for proper recording and processing of the closing documents. This will ensure that the exchange will proceed more smoothly and faster as it allows the exchange company to review the documents and prepare them properly. While the IRS property exchange rules are not difficult, they are stringent and must be adhered to strictly.

This is a fairly simple procedure, but due to the nature of the strict rules and regulations, it is advisable to have a professional handle the exchange. By using a company to handle the exchange, you release yourself from a fair amount of liability and your adherence to the rules and regulations are much more likely. When you attempt to do it yourself, you run the risk of missing something and landing in a lot of trouble.

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