1031 Property Exchange
Who we are!
Through the fusion of Qualified Intermediary Services LLC and C3Funding, we bring over 50 years of fundraising and 1031 exchange experience to you.
Together, our staff helps facilitate tax-deferred exchanges of investment and business real estate. We provide intermediary services to assist sellers in retaining their equity and preventing the imposition of capital gains and recapture of depreciation taxes so all net receipts from sale can be used to purchase replacement properties.
Who qualifies for the Section 1031 exchange?
Owners of business and investment real estate may qualify for a Section 1031 deferral. Individuals, C corporations, S corporations, partnerships (general or limited), limited liability companies, trusts and any other taxpaying entity may set up an exchange of business or investment real estate for new replacement business or investment real estate under Section 1031.
What are the different structures of a Section 1031 Exchange?
To accomplish a Section 1031 exchange, there must be an exchange of properties. The simplest type of Section 1031 exchange is a simultaneous swap of one property for another. Deferred exchanges are more complex but allow flexibility. They allow you to dispose of property and subsequently acquire one or more other like-kind replacement properties. To qualify as a Section 1031 exchange, a deferred exchange must be distinguished from the case of a taxpayer simply selling one property and using the proceeds to purchase another property (which is a taxable transaction). Rather, in a deferred exchange, the disposition of the relinquished property and acquisition of the replacement property must be mutually dependent parts of an integrated transaction constituting an exchange of property. Taxpayers engaging in deferred exchanges generally use exchange facilitators under exchange agreements pursuant to rules provided in the Income Tax Regulations. A reverse exchange is somewhat more complex than a deferred exchange. It involves the acquisition of replacement property through an exchange accommodation titleholder, with whom it is parked for no more than 180 days. During this parking period the taxpayer disposes of its relinquished property to close the exchange.
What property qualifies for a Like-Kind Exchange?
Both the relinquished property you sell and the replacement property you buy must meet certain requirements. Both properties must be held for use in a trade or business or for investment. Property used primarily for personal use, like a primary residence or a second home or vacation home, does not qualify for like-kind exchange treatment. Both properties must be similar enough to qualify as "like-kind." Like-kind property is property of the same nature, character or class. Quality or grade does not matter. Most real estate will be like-kind to other real estate. For example, real property that is improved with a residential rental house is like-kind to vacant land. One exception for real estate is that property within the United States is not like-kind to property outside of the United States. Also, improvements that are conveyed without land are not of like kind to land. Only real properties qualify as exchange properties under Section 1031; Finally, certain types of property are specifically excluded from Section 1031 treatment. Section 1031 does not apply to exchanges of: • Personal property • Inventory or stock in trade • Stocks, bonds, or notes • Other securities or debt • Partnership interests • Certificates of trust