1031 Exchanges & Tax Deferred Savings
A 1031 Tax Deferred Exchange or Real Estate Exchange
is an extremely powerful investment technique which allows your
tax dollars to remain invested in property rather than being
paid out as income tax. 1031 exchanges allow a buyer to
leverage the
deferred tax savings into alternative real estate properties
to create wealth.
Section 1031 of the Internal Revenue Code states “No gain or
loss shall be recognized if property held for productive use in
a trade or business or investment purposes is exchanged solely
for property of a
like-kind.”
How 1031 Exchanges Work:
Single or multiple properties may be exchanged in the
1031 Exchange
transaction. The first
step of the exchange occurs when the relinquished property sells
and the proceeds are held by a “Qualified
Intermediary”. Bankers Escrow Corporation is your safe and
secure qualified intermediary with Fidelity bonding and
segregated money market accounts at FDIC insured banks for each exchangers funds. All interest earned is paid
to the exchanger.
The second step involves identification and purchase of
replacement 1031 Exchange property. An Exchange Agreement
must be set up prior to any sales transaction.
Specific requirements defined in Section 1031 include a 45 day
identification period, a 180 day period in which to close on a
replacement property and the use of a “Qualified Intermediary” as
the taxpayer cannot receive any proceeds from the sale of the
relinquished property either actually or constructively.
Understanding how the
1031 exchange process will affect your
real estate transaction is very important. Bankers Escrow
Corporation provides assistance in identifying potential problems
and areas of concern for agents or investors whom lack experience in
exchanging.
Bankers Escrow Corporation’s experienced staff of CPA’s, Certified
Exchange Specialist and escrow officers will process exchange
documents within the same day with the goal of making your exchange
easy, convenient and inexpensive. Email us at
request@bankersescrow.com
or call 303.986.4848 or 1.800.571.6595 for a free consultation.
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