Steps to a 1031 Exchange

Step 1

CONTACT APEX EXCHANGE GROUP

Seeking a Qualified Intermediary (Q1) is the first step in processing a successful 1031 exchange.
Remember, you must begin your exchange before closing on your relinquished property.

Step 2

SELL THE RELINQUISHED PROPERTY

  • Execute a sales contract on your relinquished property, mention the 1031 exchange within the contract to notify the buyer of your intent to do a 1031 Exchange.

  • Provide our contact information to your closing agent.

  • Upon the close of the relinquished property sale the proceeds will be wired to us on your behalf until you purchase your replacement property.

  • Your 45-day and 180-day periods start the day of the close.

Step 3

IDENTIFY REPLACEMENT PROPERTY

  • You have 45 days from the close of your relinquished property to identify your replacement property(ies).

  • There are 3 rules in which you can properly identify replacement properties: 3-property rule, 200% rule, and 95% rule.

  • In order to defer all taxes, the value of the replacement property(ies) must be equal or greater than the value of the sale of your relinquished property.

Step 4

PURCHASE REPLACEMENT PROPERTY

  • You can use exchange funds to close on a replacement property at any time during the 180-day period: mention the 1031 exchange within the contract to notify the seller of your intent to do a 1031 exchange.

  • Provide your closing agent with our contact information.

  • We will work with your closing agent to draft or obtain all necessary documents.

  • At closing of your replacement property or at the expiration of the 180-day period, your exchange will close and any remaining funds will be disbursed back to you.

The main benefit of carrying out a 1031 exchange rather than simply selling one property and buying another is the tax deferral. A 1031 exchange allows you to defer capital gains tax, thus freeing more capital for investment in the replacement property.

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