Trusted 1031 Exchange Expertise

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Like-Kind Exchange

Banker Exchange provides full-service, tax-deferred exchange services under Section 1031 of the Internal Revenue Code (IRC).

A 1031 exchange, also known as a like-kind exchange, is a tax strategy used by real estate owners and investors to defer taxes on property dispositions or sales. It allows an exchange of real property used in a trade or business, or held as an investment, for other real property used in a trade or business or held for investment. Like-kind refers to nature or character, not grade or quality; it is not necessary to re-invest in the same asset class. If you are considering a 1031 exchange or ready to move forward with one, it’s important to partner with a qualified intermediary (QI).

To learn more, get in touch with us today. Our team can answer any questions you have about 1031 Exchanges.

Banker Exchange

What is a 1031 Exchange?

Deferring federal, state, and sometimes local capital gains tax allows more equity to be invested in replacement property. Portfolios can diversify, relocate to new markets and even grow faster due to equity reinvestment.

Banker Exchange has a team of friendly, knowledgeable professionals on hand to teach investors all aspects of 1031 exchanges. We can explain 1031 exchange requirements in detail, allowing taxpayers to make an informed decision about whether a 1031 is beneficial to their interests.

4 Types of 1031 Exchanges

Simultaneous Exchange

A simultaneous exchange occurs when both the relinquished and replacement properties are transferred at the same time. Two taxpayers are swapping properties. This type of exchange does not require the use of a qualified intermediary.

Forward/Deferred Exchange

The most popular or commonly used exchange is the deferred exchange. This exchange begins with a taxpayer selling relinquished property then acquiring replacement property within the mandated timelines.

Reverse Exchange

With a reverse exchange, replacement property is acquired before the sale of relinquished property. This type of exchange can be beneficial when exploring investment properties in a seller’s market.

Improvement Exchange

Also called a construction exchange, this exchange includes improvements constructed during the exchange period, intending for those improvements to be included in the Exchange Requirement.

How a 1031 Exchange Works

1031 Exchange utilizes a QI to sell a qualified property and use the proceeds toward the purchase of qualified property of equal or greater value. The QI holds the proceeds of the sale for the subsequent purchase of replacement qualified property/properties.

The 1031 Exchange Process:

Choose property to exchange
Partner with a QI
Consult with preferred tax professionals
Sign QI-prepared exchange documents
QI transfers funds to complete purchase
Exchange is complete

1031 Exchange Requirements You Need to Know About

All four requirements must be met in order to qualify for 1031 exchange treatment.

Qualified Use

Any real property held for investment or used in a trade or business qualifies for 1031 exchange. Like-kind refers to nature or character, not grade or quality.

Value Requirement

A taxpayer must be in the same position after acquiring replacement property as they were in the relinquished property. This means all equity from the relinquished property must be reinvested and all debt from the relinquished property must be replaced.

Mandated Timelines

The timelines for 1031 exchanges are very strict.  Section 1031 is the only place in the Internal Revenue Code that does not give extensions for weekends or holidays. The exception to this is a Federally declared disaster area and the IRS issuing a “Disaster Relief Notice”.

Administrative Requirements

The sale of one piece of property and purchase of another property alone does not qualify for 1031 treatment. 1031 exchange requires interdependence of the 2 transactions. This is most easily accomplished using a qualified intermediary.

Banker Exchange can explain in depth the rules associated with 1031 exchanges. On top of that, we  keep our clients up to date on changes to IRS regulations. In doing so, we make it easy to maximize the value of your 1031 exchange.

Get Started with a 1031 Exchange

Banker Exchange has over 30 years of experience as a qualified intermediary, giving us the expertise to handle even the most complex exchanges for our clients.

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