No, there are certain persons who may not act as your Qualified Intermediary. Generally, these include certain relatives, or someone who, within a two-year period prior to your exchange, has acted as your attorney, accountant, real estate broker, or agent.

Learn more about qualified intermediaries.

Experience, financial stability, and customer satisfaction are factors that you should consider. First American Exchange possesses all these qualities.

Learn more about First American Exchange Company.

Each 1031 exchange is unique. At First American Exchange Company, we are committed to providing top-tier, customized service to our clients by taking the details of each transaction into consideration. Our fees reflect many factors, including the type and number of properties involved, the location of the properties, and the overall complexity of the exchange. Rather than a one-size-fits-all approach, we tailor fees to the specific transaction, and we provide clear guidance on pricing upfront so you know exactly what to expect. Because reverse exchanges involve additional structural and legal requirements, those transactions typically carry higher fees than a standard forward exchange. At First American Exchange Company, our fees are transparent and comprehensive, with most wires and administrative services included.

When selecting a Qualified Intermediary (QI), we encourage you to ask how your exchange funds will be held, whether fees have any hidden qualifiers (for example, if the fee only includes one property), and if additional charges, like wire fees, rush fees, or administrative costs, may apply. As part of the First American Financial family, we deposit exchange funds only with FDIC-insured, investment-grade banks and hold funds in segregated, taxpayer-designated accounts. We maintain broad fidelity and professional-liability coverage, and we operate under strong financial controls and governance. All our customers benefit from the financial strength of First American, supported by the expertise of our nationwide team of exchange specialists.

Learn more about why First American Exchange Company is an industry leader.

Qualified Intermediaries are appointed to carry out the exchange and prepare the necessary documentation for tax deferral, but we are precluded from counseling you on the desirability or tax implications of an exchange.

Learn more about qualified intermediaries.

The identification of replacement property must be submitted in writing, unambiguously described, signed by you, and delivered or sent before midnight of the 45th day. First American Exchange Company will provide you with forms to assist you with this requirement.

Learn more about property identification rules.

If you transfer the relinquished property and do not replace it with another, the sale will create a taxable event and any capital gain will be subject to federal and state capital gains taxes. Additionally, if you decide to cancel your exchange after First American Exchange Company receives the exchange proceeds, certain restrictions apply to all Qualified Intermediaries that limit access to those proceeds until certain time periods have elapsed. Our exchange professionals are available to discuss those restrictions.

Learn more about capital gains tax and fund access.

If you actually or constructively received proceeds from the sale, it might not be possible to include that property in a tax-deferred exchange. That's why it's important to note your intention to make this transaction part of a tax-deferred exchange in the contract to sell the relinquished property. If you have entered into a contract to sell, but have not closed, it may be possible to carry out a deferred exchange, provided you execute the proper exchange documents, identify the replacement property within 45 days of the closing, and actually receive it within 180 days or before your tax return is due. Your attorney or tax advisor can help you to make that determination.

Learn more about the 1031 exchange rules.

'Boot' can be cash received from the sale of the relinquished property or other non-cash consideration, including any property that is not 'like-kind', promissory notes, or debt relief (mortgage boot). If you receive boot in an exchange, it is likely that all or some portion of the boot will be taxed.

Learn more about boot in 1031 exchanges.

No, your principal residence is not considered property held 'for productive use in a trade or business' or 'for investment', and therefore, does not meet the requirements of Section 1031. However, Internal Revenue Code Section 121 allows an individual to exclude from taxation up to $250,000 of the capital gain realized on the sale of the individual's principal residence. A married couple filing jointly can exclude up to $500,000. Section 121 has certain requirements that must be met.

Learn more about Section 121.

No. You cannot receive the proceeds or take constructive receipt of the funds without disqualifying the exchange.

Learn more about constructive receipt.

Yes; assuming it has been held for productive use in a trade or business, it is considered like-kind with all other types of real property.

Learn more about like-kind property.

Your Qualified Intermediary should handle your exchange funds with a sense of care and trust, offering financial strength, experience, and nationwide service, along with solid credentials in facilitating tax-deferred exchanges.

Learn more about how First American Exchange Company meets these standards.

It is important to review your goals for a 1031 exchange, and all potential courses of action, with your independent tax and legal advisor(s) prior to commencing the exchange transaction. First American Exchange Company can provide helpful guidance in addition to exchange facilitation services, but cannot offer tax or legal advice, so it is essential to build a team of trusted advisors to work together with you and your Qualified Intermediary to avoid any unintended or unexpected obstacles to a successful exchange.

Learn more about qualified intermediaries.

Once your property is sold, it is too late to set up an exchange. That's why you should start considering the details of a potential exchange before putting your investment property on the market. This way, you will have time to contemplate the various factors at play and vet the process with your independent legal and tax advisors, as well as with First American Exchange Company. However, an exchange can be set up any time before the sale and transfer of your investment property. It is preferable to bring First American Exchange Company into the process at least two weeks before the planned closing date so that we can verify all details and prepare your documents with ample time for closing.

Learn more about the full 1031 exchange process.

There are two important deadlines in your 1031 exchange, and First American Exchange Company helps to provide reminders as these deadlines approach. The first deadline is the 45-day identification deadline. A taxpayer must identify their intended replacement properties, in writing, by the end of the 45th day following the sale of their investment property. If this deadline is missed, the exchange automatically ends, and all proceeds held by the Qualified Intermediary are returned to the taxpayer. The second deadline is the 180-day exchange period – any identified replacement properties must be acquired by the 180th day following the sale of the taxpayer’s property to be included in the exchange for tax deferral. Similarly, if the replacement property is not acquired within that 180-day window, the exchange ends, and proceeds are returned to the taxpayer. In both cases, the proceeds returned are taxable up to the total amount of capital gains.

Learn more about the 1031 exchange rules.

If you plan to purchase a property of lesser value to the property you are selling, and use excess proceeds to construct improvements on the new property to be included in the exchange value (and to avoid having taxable boot), you may be able to do an improvement, or “build-to-suit,” exchange.

Learn more about improvement exchanges.

In a part ownership deal, multiple investors can combine their resources to acquire a fraction of a property, most often through a Tenants-in-Common (TIC) arrangement. Investors in a TIC can use a 1031 exchange to roll the proceeds from a sold property into their share of the new property, or even separately exchange their share into a new property. Despite the complexities of these arrangements, the 1031 rules, requirements, and timelines remain the same. That's why a highly experienced expert is crucial to educate and guide all parties throughout the process.

We can offer exclusive webinars on specific topics or regions. Please contact us to arrange your private session.