Lets make the 1031 Exchange easy.
Internal Revenue Code Section 1031 is an awesome tool for real estate investors looking to build wealth.
Basically, it lets investors put off paying taxes on the profit they make when they sell an investment property, as long as they use that money to buy another investment property. This way, they can keep using their profits to grow their investments without getting hit with a big tax bill right away.
You will want to talk to your CPA, they may advise you to get a 1031 Exchange Accommodator.
A 1031 exchange accommodator, also known as a qualified intermediary, is a professional who helps real estate investors manage a 1031 exchange. They hold onto the sale proceeds from the property being sold and use them to purchase the new property on behalf of the investor. This is crucial because it ensures the transaction meets the strict rules required to defer capital gains taxes under Section 1031 of the Internal Revenue Code. Without an accommodator, investors might not be able to successfully complete these tax-advantaged exchanges.
Adam Nishikawa is a VP at Asset Exchange Company here in San Diego.
Adam can be reached at 619-550-6776
Adam has over ten years of real estate experience, particularly in the San Diego area, and has spent seven of those years becoming an expert in §1031 exchanges. He has helped many investors delay paying capital gains taxes by guiding them through these tax-deferred exchanges. Adam works closely with investors, agents, escrow officers, and CPAs to ensure clear communication, thorough education, and strict compliance with §1031 regulations.
Some Key Rules:
- Investment Property Only. (or becomes an investment property due to renting it out after a year and a day. No Flip’s)
- Work with a 1031 Exchange Company (Like Adam) and get your dates.
- Tell your Realtor ASAP. So they can find your properties to declare.
- Pick Three Candidates. But make sure the combined sum of all three purchases cannot be more than 200% of your original property’s selling price. (200% rule, no good, some gains will need to be declared.)
- 45 days to identify properties, all within 180 Days from the close of the original sale day. (Hard Deadline)
- Money cannot go to your account. A Qualified Intermediary to hold the $.
- he Title Name Must be the SAME. From the Property Name to the 1031 Exchange Name. Talk to an Expert about
- You cannot sell a lesser-value property and pocket some cash.
Adam Nishikawa is a VP at Asset Exchange Company here in San Diego.
Adam can be reached at 619-550-6776
Construction Exchange.
They can do it, but timing is an issue. Make sure to talk to Adam if you have questions.
Adam Nishikawa is a VP at Asset Exchange Company here in San Diego.
Adam can be reached at 619-550-6776
Reverse Exchange.
Acquire the property first, then 180 days to sell the original property. It’s not simple; you cannot own both properties at the same time.
Asset Exchange will Triple Net lease. And stay on title until the sells.
Lenders don’t like to lend on these, so All Cash purchases may be the way to go.
Adam Nishikawa is a VP at Asset Exchange Company here in San Diego.
Adam can be reached at 619-550-6776
What is My Responsibility during a 1031 Exchange?
Here’s what I need to do when working with an investor doing a 1031 exchange:
Inform: Always let the client know that a 1031 Exchange is an option for any business or investment listing, or even for an owner-occupied listing that has an investment component (like a house with a farm or a separate in-law unit). But, I must remember not to give tax or legal advice. Instead, I should recommend that they consult with their legal and/or tax advisors to discuss their specific situation.
Make sure to include the right 1031 Exchange language in the Purchase and Sale Agreement or as an addendum.
Advise on Opening a 1031 Exchange account before the escrow closes. Get you in contact with Adam Nishikawa at Asset Exchange Company.
Find: Start looking for replacement property as soon as possible. My client is on a strict deadline to identify and secure a replacement property, so the sooner we start searching, the better.
Mike Frey Your Realtor 858-330-1242
Make sure to consult with your CPA, legal team, and anyone else who can help guide your decisions. As a Realtor, I follow the instructions from you, my client, and the accommodator. I do not offer legal or tax advice as I am not licensed or qualified to do so. My expertise is solely in buying and selling real estate in California.