1031 EXCHANGE SERVICES
A 1031 Exchange is the means by which a seller of property held for
productive use in a trade or business or for investment may defer
payment of taxes on gain by exchanging that property for other "Like
Kind" property which is also to be held for use in a trade or
business or for investment. When our Company is asked to be a
Qualified Intermediary, Mercury Exchange will prepare a "Like Kind
Exchange Agreement" . In order to prepare the Agreement, Mercury
Exchange will require a contract to buy and sell real estate with
reference to a tax deferred exchange for the relinquished property
and a copy of the title commitment.
Security Title Guaranty Co. has partnered with its
sister company, Mercury Exchange, to provide
intermediary services for Sellers and Purchasers of
investment real estate in all 50 states and the U.S.
Virgin Islands.
What Security Title/Mercury Exchange helps us do
- Prepare Like Kind Exchange Agreement
- Coordinates with Title Company handling closing
of sale & purchase
- Deposit proceeds into an Interest Bearing
Account (funds are not commingled)
- Notify Exchanger of funds being invested
- Notify Exchanger of critical dates 45th and
180th day
- Send reminder letter that 45th day is
approaching if no properties have been identified
- Disburse funds to appropriate party for the
closing of replacement property(ies)
- Provide letter showing all deposits,
withdrawals, and interest earned after the Exchange
has closed
Security Title Guaranty Co. can provide closing and title insurance
services on relinquished and replacement properties in Colorado.
IMPORTANT THINGS TO KNOW
The IRS Rules for Exchanges
You will need to follow these primary rules for your exchange to
meet stringent IRS regulations:
- Real Property Use. Both your old and new properties must
qualify as investment or business use. If both properties pass
this test, you can exchange nearly any type of real estate.
- 45 Day Identification Period. You have 45 DAYS from the
closing of your sale to list the properties you may want to
purchase. There are NO exceptions to the deadline.
- 180 Day Exchange Period. From the sale closing date, you
have 180 days to close on the purchase of one or more of your
IDENTIFIED PROPERTIES. There are NO exceptions to this deadline.
- Qualified Intermediary (QI) The IRS mandates that you use a
QI to prepare the legal documents for your exchange. Because the
QI must be independent, it cannot be your friend, employee,
broker or even your accountant or attorney. The QI also holds
your money, so that you do not have access to it.
- Proper title holding. You must purchase and take title to
your identified property EXACTLY as you held title to your
relinquished property.
- Reinvestment Requirement. To defer all of your capital gain
tax, you must buy a replacement property equal or higher in
value than the one you sold. Also, you must reinvest all of the
cash proceeds from your sale.
- Financing. If you are financing a portion of the Replacement
Property, the loan amount should not cause you to receive cash
back at the time of closing.
 ******IF
YOU HAVE QUESTIONS AS TO ANY OF THE ABOVE, PLEASE CONTACT YOUR
C.P.A. OR YOUR TAX ATTORNEY FOR POSSIBLE TAX RAMIFICATIONS. SECURITY
TITLE GUARANTY CO. EXCHANGE SERVICES DOES NOT PROVIDE TAX OR LEGAL
ADVICE |
