Getting Started with a 1031 Reverse Exchange
- STEP 1 – Contact Exchange Resource Group immediately upon deciding to do a 1031 reverse exchange to ensure proper document preparation and coordination of all parties, including real estate agent, tax advisor and title company.
- STEP 2 – Discuss your reverse exchange with your tax advisor.
- STEP 3 – Make sure that the real estate contracts have the 1031 reverse exchange terminology in the contract that allows for the assignment & indicates your intent to do an exchange.
Sample Terminology for Real Estate Contracts (Taxpayer should consult their tax advisor or real estate professional as this is suggested language only):
“Both the Seller and the Buyer hereto agree to cooperate with each other in a manner necessary to enable either party to qualify for a IRC Section 1031 tax-deferred exchange at no additional cost or liability to either party. Either party’s rights and obligations will be assigned to Exchange Resource Group to facilitate such exchange.”
- STEP 4 – New property must be identified within 45 days of the closing of the old property.
- STEP 5 – Acquisition of the new property must be completed within 180 days of the closing of the old property.