1031 Exchanges
Help Your Clients, Increase Your Commissions
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How Does My Seller Set Up An Exchange?
- Your client's sales contract should contain wording that shows an intent to use the proceeds from the sale to perform a 1031 exchange. A real estate attorney or firm who acts as a Qualified Intermediary (Facilitator) can help you with the wording. Become familiar with a few of these companies before you start working with exchanges, so that you can advise your clients about the reliability, services, and costs associated with each one.
- Send the Intermediary a copy of the sales contract, and any other information they require.
- Start helping your client find another property. The new property must be among selections identified in writing to the Intermediary within 45 days from closing on the relinquished property. The IRS offers no flexibility on this time period.
- The closing date for the new property must take place within 180 days of the closing on the relinquished property. Again, there's no flexibility with the time.
Stay in close touch with the Intermediary. Be sure to keep them advised regarding the closing date. They will be responsible for most paperwork associated with the exchange, and can help you understand your responsibilities as an agent.
Tax deferred exchanges are not difficult, but you do need expert help. Ask questions, and stay on top of changes to the tax laws. You aren't expected to be a tax expert or to give tax advice, but you are expected to know who to contact for the answers.
A successful exchange does put extra commission dollars in your pocket, but it achieves something else. A happy client is your best source of referrals, and referrals are one of the most important ingredients in your future income.
More Resources
- Refer to the 1031 Exchanges Subjects page for links to more information.
