A 1031 tax deferred exchange step-by-step guide

(c) Copyright 2006 by Mark Hays

Next, you need to choose an accommodator for your 1031 exchange and sign the exchange agreement with him/her. Once you have decided on an accommodator for your 1031 tax deferred exchange, sign the exchange agreement with him or her through escrow. You will need to sign a bit of paperwork for this step. Bear in mind that the job of a qualified intermediary or accommodator is to receive the proceeds of the sale under the terms of a 1031 exchange agreement and then apply the funds at the direction of the 1031 exchanger for the purchase or the replacement property. Therefore, pick a reputable company that you trust.

Finally, you can go to closing. As with all real estate sales, closing can be the most tedious step of the whole process. When you are doing a 1031 exchange, at the close of escrow, your proceeds from sale of your home will be transferred to your accommodator’s trust.

The proceeds will be held at that trust until you instruct the trust to use the funds to buy a replacement property. In order to complete the 1031 exchange, you must find a replacement property under a specified period of time.

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