IPX1031 Insight Blog

Simple Steps to Start a 1031 Exchange

1031 Exchange Time?  Follow These Simple Steps to Get Started

Oftentimes investors want to structure their real estate sales as Tax Deferred 1031 Exchanges but are unsure as to how to begin and when to involve IPX1031 in the exchange process. 

Below we will walk you through the essential simple steps if you are an investor getting ready to open your exchange or one of our industry partners whose client is starting an exchange.


Exchangers & Real Estate Investors – How to Begin Your 1031 Exchange

As an investor or business owner looking to maximize investment potential, a 1031 Exchange is often a great strategy.  A 1031 Exchange allows investors and business real estate owners to defer taxes when real estate is sold providing other investment and/or business real estate is purchased.  Below are the essential simple steps for beginning your 1031 Exchange with IPX1031.

Most importantly, your 1031 Exchange must be set up prior to the transfer of the property you are selling (or buying in the case of a Reverse 1031).  Contact us as soon as there is a signed purchase agreement/contract by phone or our start an exchange form.

As your 1031 Qualified Intermediary, we will explain the process, help you understand the different types of exchanges available, prepare the necessary exchange documents and provide important information regarding the safeguarding of your exchange funds.

We highly recommend that you engage your legal, tax, and/or financial advisors to review your specific circumstances before deciding to structure your real estate sale as a 1031 Exchange.  Although consulting with your advisor is not required by the Tax Code, it is a strategic step since IPX1031 is not permitted to give specific legal or accounting advice.

INITIAL STEP:  Contact IPX1031

Contact IPX1031 by phone or via our start an exchange form when you’re under contract and you’ve accepted an offer for the property you’re selling.  During your initial call with IPX1031, the following will be requested:

  • the fully executed purchase and sale agreement
  • settlement agent and/or closing attorney contact information
  • a preliminary title report – if available
  • contact information including all email addresses and cell phone numbers for all parties listed as “seller” on the contract

NEXT STEPS:  IPX1031 Exchange Process

We will work with your escrow / title company and your attorney / advisors to coordinate the 1031 Exchange portion of the transaction.

Although we cannot provide tax or legal advice, IPX1031 is always available to answer your questions.  In addition, there is a lot of information on our website that is available 24/7.


Industry Partners – Simple Steps to Take When Your Clients Start a 1031 Exchange

Setting up a 1031 Exchange with IPX1031 can be a simple and fast process. Remember that IPX1031, as Qualified Intermediary, must be retained and 1031 Exchange documents must be signed prior to the transfer of the Relinquished Property.

INITIAL STEP:  Information to Provide IPX1031

When you contact us by phone or via our start an exchange form, we will ask for your client’s:

  • the fully executed purchase and sale agreement
  • settlement agent / closing attorney’s contact information
  • a preliminary title report – when available
  • contact information including all email addresses and cell phone numbers for all eligible signers for the property being sold

NEXT STEPS: IPX1031 Exchange Process

IPX1031 will prepare the Exchange documents and assist in coordinating wires and other necessary steps for the 1031 Exchange.

Why IPX1031 for Your Client’s 1031?

The regulations that govern 1031 Exchanges are very specific and must be followed by the exchanger in order to have a successful exchange. The Tax Code requires taxpayer to use a qualified party, such as IPX1031, to both facilitate and hold funds during an exchange. IPX1031 provides your clients with guidance, expertise, and industry leading security for their funds. IPX1031 will work with your client to make the process easy and understandable.


Below is our summary checklist for real estate property owners contemplating a 1031 Exchange. Be sure to click on links for further detail:

 

1031 Exchange Process Checklist: 

  • Include a cooperation clause in your contract
  • Reach out to IPX1031 by phone or online form when you have a signed purchase agreement/contract
  • Consult with your tax/legal professionals to ensure that a 1031 Exchange is in your best interest.
  • IPX1031 prepares your exchange documents
  • Sign all documents prepared by IPX1031 prior to the transfer
  • Close on the sale of your Relinquished Property.
  • Identify your new Replacement Property within 45 days of closing
  • Enter into contract for your new Replacement Property
  • Contact IPX1031 once Replacement Property contract is signed. IPX1031 will prepare the exchange documents necessary to complete your exchange
  • Once closing is scheduled, contact IPX1031 to arrange for your funds to be wired to escrow/title company
  • Your exchange is complete!

Taxpayers should always consult with their tax and legal advisors for advice with respect to their individual situation.

Read More About 1031 Exchanges:

Understanding 1031 Exchanges: What Is a 1031 Exchange?
Delayed 1031 Exchange – Timelines, Deadlines and Identification
Exchange Cooperation Clauses
1031 Exchange Checklist

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