1031 Exchange Agreement Form For Deed In Texas
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How to Do a 1031 Exchange Choose a qualified intermediary to coordinate the exchange. Sell your current real estate property. You have 45 days to identify potential replacement properties. You have 180 days to close on a replacement property. File IRS Form 8824.
A crucial requirement in a 1031 exchange is that the same taxpayer must sell the relinquished property and acquire the replacement asset. However, there are scenarios where a change of ownership can occur in properties involved in a 1031 exchange without invalidating the exchange.
The IRS 1031 exchange rules allow Texas real estate investors to defer capital gains tax when they reinvest the proceeds from a property sale into a like-kind property. To utilize this tax strategy in the current tax year, the properties involved must be held for productive use in a trade, business, or investment.
Every real estate transaction is unique, but a reverse 1031 exchange is typically completed in six steps. Qualified Intermediary or Exchange Accommodator Titleholder Agreement. Buy The Property. EAT Takes Possession of Title To The New Property. Exchanger Identifies the Relinquished Property. Choose a Qualified Intermediary.
A 1031 exchange does not obviate the need for a realtor. Quite to the contrary, in most cases an Exchanger has an even greater need for a realtor due to the time constraints placed on Exchangers.
Under Section 1031 of the Internal Revenue Code, it's entirely possible to exchange raw land for another 'like-kind' property, which could even be a rental property. It's crucial to remember, though, that properties for personal use, including your main home or vacation homes, don't qualify for a 1031 exchange.
While it may be tempting to ask your CPA to act as your Qualified Intermediary, a CPA cannot facilitate a 1031 exchange between investors. Under IRC Section 1031 guidelines, CPAs, attorneys, investment bankers, and real estate agents/brokers fall under the 'agent' category.
What Is a Qualified Intermediary? Qualified Intermediary (QI) is someone a property seller selects to oversee the 1031 exchange process and its funds. They hold the funds from the previous property and use them to acquire the new replacement property to ensure compliance with IRS regulations.
A Qualified Intermediary, or QI, is an independent third party to the transaction whose function is to prepare the documents necessary to create the exchange, as well as to act as the independent escrow agent for the exchange funds.
