1031 Exchange Process

Typically, the 1031 exchange process begins when an investor considers selling an investment property. At this time, the investor should consult with their accountant regarding the tax implications of the sale and the potential tax benefits of completing a 1031 exchange. The investor should also evaluate their financial situation to determine if completing an exchange aligns with their financial needs and goals. While our dialogue with potential investors begins at various points in the exchange process, ideally that’s the time we like to begin our conversations with them. We’ll work with the investor to understand their financial goals, the details of their exchange, and to discuss potential replacement properties.

If the investor determines they want to complete a 1031 exchange, they need to contact a qualified intermediary and their attorney so the proper documents can be completed prior to closing on the relinquished property.

When the relinquished property is sold, the sale proceeds are deposited at the qualified intermediary and the investor has a specific amount of time to identify and close on the replacement property. At this point in time, we are actively evaluating potential replacement properties with the investor, our client. Typically, our clients are able to select and close on their property(s) during the identification period. When this is not the case, we work with our clients and their qualified intermediary to identify replacement property that will be purchased. The closing process is quite simple for the client—it’s coordinated by our firm, the sponsor firm, and the investor’s qualified intermediary.

Whether you’re thinking about selling a property and want to better understand the 1031 exchange process and investment choices, or if you already sold your property and have the proceeds deposited at a qualified intermediary, we can help.

If you’re interested in better understanding the 1031 Exchange process and your investment choices, we can help.