1031 Exchange Agreement Form For Deed In Montgomery
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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.
Your settlement agent is required to submit the 1099-S upon the completion of every sale and Form 8824 is your way of notifying the IRS that you did an exchange on that sale and may have deferred your tax liability.
Appraisals are an integral part of the 1031 exchange process as they provide an unbiased estimate of the property's value.
Your 1031 exchange must be reported by completing Form 8824 and filing it along with your federal income tax return. If you completed more than one exchange, a different form must be completed for each exchange. For line-by-line instructions on how to complete form, download the instructions here.
If during the current tax year you transferred property to another party in a like-kind exchange, you must file Form 8824 with your tax return for that year. Also file Form 8824 for the 2 years following the year of a related party exchange. See Line 7, later, for details. Section 1031 regulations.
However, in a typical 1031 exchange, the QI does not take title to either the relinquished or replacement properties. The investor holds the title. In a straightforward (deferred) 1031 exchange, the investor sells the property they have targeted for disposition, and the new owner takes the title.
A qualified intermediary is used to hold the proceeds of the Relinquished Property sale until it is time to transfer those proceeds for the close of the Replacement property.
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.
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.