Top 4 Things To Know When Using 1031 Exchanges
Every 1031 exchange is different, but there are a few universal tips that will help ensure a smooth process in a tax-free exchange from start to finish:
These are just a few tips to hopefully help you and your team when planning for a 1031 exchange. Granite Exchange will be there every step of the way to ensure that your exchange process is as smooth as possible.
Make sure that the property you are selling (Relinquished Property) and the property you are purchasing (Replacement Property) qualify as investment/business-use property. If you are not sure, give us a call, and we can provide you with some information to help you make that determination.
Remember that the taxpayer on the title to the Relinquished Property (individual, trust, corporation, etc.) is the taxpayer that needs to acquire and take title to the Replacement Property.
Make sure you have a Qualified Intermediary (QI) in place prior to closing the first transaction. Many of the exchanges we get are oftentimes last-minute exchanges because the taxpayer does not realize that they need a QI until they are at the closing. Taxpayers mistakenly assume that if they tell their Realtor or title closing agent that they want to do an exchange, then the Realtor® or title agent will make sure it gets set up. The responsibility for setting up the exchange is solely on the taxpayer.
Speaking of Realtors and title closing agents, make sure that you do keep them in the loop of what your plans are so that there aren’t any last-minute surprises or unexpected delays.