Who can handle 1031 exchange?

The Qualified Intermediary for your exchange. Under Section 1031 of the Internal Revenue Code (IRC), owners of business or investment properties, through the use of a Qualified Intermediary, can sell one property and purchase a similar or “like-kind” property while deferring capital gains.

A qualified intermediary (QI) must facilitate a 1031 exchange. The QI is a person who holds funds from the relinquished property and uses them to acquire the new replacement property. These funds never come into contact with the property owner, who is involved in the 1031, per the IRS 1031 rules.

What do you need to know about the 1031 exchange?

All 1031 exchanges must involve swapping or trading with other property owners…… (NO) Well before delayed exchanges were codified (by IRS) in 1984, all simultaneous exchange transactions of Real Estate required the actual swapping of deeds plus the simultaneous closing among all parties to a 1031 exchange.

What’s the difference between real property and 1031 exchange?

If we find the asset being relinquished does qualify for a 1031 Exchange, the next question is what the replacement property will be. As discussed previously, section 1031 applies to both “real property” and “personal property.” The primary difference between a personal property exchange and a real property exchange is the definition of like-kind.

What is not included in IRC Section 1031?

Under IRC section 1031, an exchange does not include any recapture of tax credits (e.g., low-income housing or rehabilitation credits) that may be applicable if the property being exchanged has not been held for the requisite holding period (15 years for the low-income housing credit). 2. What qualifies as like-kind realty under IRC section 1031?

Can a property be excluded from Section 1031?

No. The property of a taxpayer can be excluded from section 1031 even though used in a business or for investment purposes, under the following circumstances: Since property must be held for business or investment purposes in order to qualify, inventory is never deemed eligible property under section 1031.