1031 Exchange



The article below is for Guidelines only.  I highly encourage you to call or Email Andy at Old South Exchange.  He is one of the best I have met and will take the time to explain the process to you.

Contact: Andy Gustafson
Old South 1031 Exchange Services, LLC
151 Regions Way Suite 3-D
Destin, Florida 32541
Phone: 850.837.3043
Fax: 850.837.0874
Email: info@oldsouthexchange.com

There are many types of exchanges including delayed, reverse, non safe harbor reverse, simultaneous, and build to suit/improvement.  They share common time lines and procedures. 

Upon exchange property closing, exchange funds are deposited into an escrow account agreed upon by the Exchangor and Qualified Intermediary.

Within 45 calendar days of the exchange property closing, the Exchangor must provide in writing a legal description of the replacement properties to the Qualified Intermediary.  This is called the Identification Period.

Within the earlier of 180 days following the closing of the exchange property or due date including extensions for the Exchangor´s tax return for the taxable year the transfer of the replacement property occurs.

Any transaction after October 16th or 17th (depending upon whether the year the tax return is due is a leap year) and the tax return is due April 15th, less than 180 days will be available to close on the replacement property unless a request for an extension is filed.

 

Two rules and one exception apply:
1) Identify up to three properties without regard to their fair market value. (or)

2) Identify any number of properties as long as their aggregate fair market value of the replacement properties does not exceed 200 percent of the aggregate market value of all the relinquished properties.

95% Exception If the Exchangor identifies more potential replacement properties than allowed under either the three property or 200% rule, the Exchangor must receive replacement property by the end of the exchange period that has a fair market value of at least 95% of the aggregate fair market value of all the identified replacement properties.

The identified properties must be listed in a written document signed by the Exchangor and hand delivered, mailed, faxed, emailed by midnight of the 45th calendar day after the closing of the relinquished property including the legal description, street, statement itemizing construction/improvements of the replacement property.

 

11 Steps of a Delayed Exchange
1) The Exchangor signs a Purchase and Sale Agreement to sell the exchange (relinquished) property to buyer. Value of replacement property must be equal or greater value than the exchange property.

2) Exchangor engages Old South 1031 Exchange Services, LLC as Qualified Intermediary. Exchangor reviews and signs Engagement letter and Exchange Agreement.

3) An Assignment of Purchase and Sale Agreement assigns the rights of relinquished property to an Exchange Services.

4) At the relinquished property closing ownership is transferred through a direct deed to buyer.

5) At the relinquished property closing, the exchange funds are wire transferred to an escrow account at a bank agreed upon by the Exchangor and Exchange Services.

6) Exchangor identifies replacement property in writing within a 45-day Identification Period. Exchangor has 180 days beginning on the closing of the relinquished property to purchase replacement property.

7) Exchangor signs Purchased and Sale Agreement to acquire the replacement property.

8) An Assignment of Purchase and Sale Agreement assigns the rights of the replacement property to Old South 1031 Exchange Services, LLC.

9) At the replacement property closing the exchange funds are wire transferred from the escrow account.

10) At the replacement property closing ownership is transferred through a direct deed to the Exchangor.

11) At the end of the 180th day Exchange Period, all earned interest and remaining proceeds are sent to Exchangor along with an account summary.