The main requirements for a 1031 exchange are: (1) must purchase another “like-kind” investment property; (2) replacement property must be of equal or greater value; (3) must invest all of the proceeds from the sale (cannot receive any “boot”); (4) must be the same title holder and taxpayer; (5) must identify new …

Can I do a 1031 exchange by myself?

The Use of a Qualified Intermediary is Required That requirement eliminates the ability of an investor to complete a 1031 exchange without assistance. The qualified intermediary cannot be the investor and cannot work for, be related to, married to, or an agent of the investor.

What do you need to know about a 1031 exchange?

The contract must have a paragraph stating the purchase is subject to a 1031 Exchange and the Seller agrees to cooperate with the exchange (1031 Exchange Cooperation Clause). Provide purchase information.

Can you refinance a property before a 1031 exchange?

The whole point of the 1031 Exchange is moving investment money forward to invest in more property. Pulling money out tax free prior to the exchange would contradict this point. For this reason, you cannot refinance a property in anticipation of an exchange. If you do, the IRS may choose to challenge it.

Why is tenancy in common important in a 1031 exchange?

Tenancy in common can be used to divide or consolidate financial holdings, to diversify holdings, or gain a share in a much larger asset. It allows you to specify the volume of investment in a single project, which is important in a 1031 exchange, where the value of an asset has to be matched to that of another.

How are funds held in escrow in a 1031 exchange?

It’s important to note that investors cannot receive proceeds from the sale of a property while a replacement property is being identified and purchased. Instead, funds are held in escrow by a 1031 exchange intermediary—sometimes referred to as an accommodator—until the replacement property is purchased.