A 1031 exchange is a tax deferment strategy that allows an investor to sell investment property and use the proceeds to purchase other property, without having to pay taxes on the sale.
What is a 1031 Exchange?
Free 1031 E-Book
Written by Tim Cooney & John Lund, this is a comprehensive, yet digestible look into the 1031 exchange and its various nuances an investor may encounter.
We get into the details of your exchange, providing real life examples of 1031 success stories and how investors got there.
Which type of Exchange is Right for Me?
An investor should weigh all of their options before proceeding with an exchange. The investor may choose to proceed with a forward, construction, or reverse exchange. Much less commonly an investor may proceed with a reverse-construction exchange.
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A forward exchange is chosen by most investors, as it is the simplest and most common type of exchange.
A forward exchange simply involves selling one or more properties, referred to as “relinquished property”, and purchasing one or more properties, known as “replacement property”.
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A reverse exchange is chosen by investors that want to buy a property before they sell the relinquished property.
Generally, a short-term bank note or cash is used to finance the purchase, and the deed to the property is held by the QI, to be returned when the relinquished property is sold.
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A construction exchange is chosen by the investor that wishes to build or improve a replacement property.
The hardest part about completing a construction exchange is that the investor must use all necessary funds from the exchange before 180 days are up. It is important that the investor keep track.
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As it sounds, a reverse-construction exchange is a combination of both a reverse & construction Exchange.
An investor will purchase the replacement property first (using a short-term note or cash). The deed will be held by the QI, and the property will be improved. The relinquished property will be sold thereafter.
Forward 1031 Exchange Timeline
on day 0
sell property
before day 45
identify property
before day 180
purchase property
1031 Real Estate Exchange Specialist will do the heavy lifting for you.
We’ll contact the closing team for all of your transactions to help your 1031 be successful. We will also ensure every necessary document is signed and completed correctly.
How much does a 1031 exchange cost?
Each exchange type requires different efforts by your QI, so pricing varies.
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$1,150 in a one sale, one buy scenario.
$750 for the first sale, $400 for the first buy.
$400 for each additional buy.
$400 for each additional sell.
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Standard Fee for Reverse Exchange: $4,500
First Buy: $4,000 First Sell: $500
Additional Buy: $2,000
Additional Sell: $500
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Construction Exchange Fee: $4,500
Additional Buy & Development: $2000
Additional Buy: $500
Additional Sell: $500
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Reverse-Construction Exchange Fee: $4,500
Additional Buy & Development: $2000
Additional Buy: $500
Additional Sell: $500
No Hidden Fees = Less Stress
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If you meet the criteria set forth by IRC Section 1031, you are able to, and likely should, complete a 1031 exchange.
Federal Capital Gains taxes can be as high as 20% + your states capital gains tax rate.
If you’ve taken depreciation on your real estate asset, you will be liable for depreciation recapture taxes of 25%.
Your gain could possibly be taxed at over 50%.
Check out our calculator to see how much you could save.
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A 1031 QI holds your funds in a trust or escrow account under your tax ID number, in order to protect you from realizing your gains.
It’s important that your QI is knowledgeable and trustworthy to ensure your investment proceeds are safe.
In order to actually benefit from a 1031 exchange, an investor must not “touch” their proceeds from selling their property. If the investor does, the money will be considered “realized capital gains” and they will owe taxes.
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Generally, no.
It’s important that the property has been held for at least a year and a day to qualify, and the investment property must not be your primary residence.
The sale of a primary residence is also subject to tax savings, a $250,000 exclusion for singles and $500,000 for married couples, provided you have lived in the property for 2 out of the last 5 years.
Always consult your accountant and/or attorney before you start a 1031 exchange.
Founded by Tim Cooney, 1031 Real Estate Exchange Specialist is a 1031 Exchange Company (Qualified Intermediary) based in Durango, Colorado. We have been performing exchanges for over 30 years.
We’ve helped thousands of clients perform 1031 exchanges while providing knowledge and experiential advice. Our client’s success is our success.
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After graduating from Notre Dame in 1968, Mr. Cooney began a career in accounting. He has been an accountant for over 60 years and a licensed realtor for 46. The knowledge Tim brought from both real estate and tax work is how he became so well acquainted with real property and 1031 exchange work.
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Gina Warner, an avid businesswoman, has ran fly shops, bagel stores, and built cell phone towers before selling these businesses to focus on 1031 exchanges. Gina has worked in the real estate industry for over 20 years, and has been in the exchange business for 7 years. Gina knows 1031s like the back of her hand, and makes sure your exchange flows seamlessly.
We provide exchange services in all 50 US states & Territories:
We are based in the four corners area, where we began servicing Durango, CO and Farmington, NM.
You may be asking yourself, is there a 1031 specialist near me? Don’t worry, 1031 exchanges can be done nationally, and you can use any QI in the United States to perform your exchange. We perform 1031 exchanges nationally and work with any closing team or company in the US or its territories to complete your exchange.
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Durango, CO; Farmington, NM; San Francisco, CA; New York, NY; Los Angeles, CA; Seattle, WA; Washington, DC; San Jose, CA; Boston, MA; Denver, CO; Austin, TX; Miami, FL; Portland, OR; Dallas, TX; Houston, TX; Atlanta, GA; Philadelphia, PA; San Diego, CA; Chicago, IL; Minneapolis, MN; Detroit, MI; Phoenix, AZ; Las Vegas, NV; Salt Lake City, UT; Baltimore, MD; Tampa, FL; Sacramento, CA; Orlando, FL; Nashville, TN; Raleigh, NC; St. Louis, MO; Charlotte, NC; Pittsburgh, PA; Indianapolis, IN; Kansas City, MO; Columbus, OH; Milwaukee, WI; Cincinnati, OH; Cleveland, OH; San Antonio, TX; Louisville, KY; Buffalo, NY; Richmond, VA; Rochester, NY; Hartford, CT; Providence, RI; New Orleans, LA; Jacksonville, FL; Memphis, TN; Birmingham, AL; Oklahoma City, OK.
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We service Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.
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The islands that are eligible for a 1031 exchange are limited to those that are located in the United States and its territories. This includes Puerto Rico, Guam, American Samoa, Virgin Islands, Northern Mariana Islands, District of Columbia and any other territory or possession of the United States.