1031 Exchange Agreement Form For Export In Pima
Description
Form popularity
FAQ
While an investor can choose which property to sell (exchange) and identify replacement properties, the investor/taxpayer may not control or have access to the funds in between those two events. For that reason, the use of a qualified intermediary is necessary.
01 Financial Institutions Serving as a Qualified Intermediary Related to IRS Section 1031 Like-Kind Property Exchanges. Any financial institution authorized to exercise full trust powers is permitted to act as a qualified intermediary on an IRS 1031 property exchange.
In a three or four party exchange, including the Taxpayer, Buyer of the old property and Seller of the replacement property, then yes, a Qualified Intermediary is required.
A 1031 exchange gets its name from Section 1031 of the U.S. Internal Revenue Code, which allows you to avoid paying capital gains taxes when you sell an investment property and reinvest the proceeds from the sale within certain time limits in a property or properties of like-kind and equal or greater value.
Probably the most important rule is that taxpayers must hire a 1031 intermediary prior to transferring their old property.
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.
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.