It is important to recognize that the exchange process is complex. Failure to properly perform the exchange process may result in tax liability. If you are considering doing a 1031 exchange, please call Equity 1031, LLC toll free at (866) 679-1031.

If you need advice as to whether a 1031 exchange is right for your situation, please consult your attorney and tax accountant.

Following is a brief summary of the steps to a standard deferred exchange:

Step 1: Call Equity 1031, LLC toll free at (866) 679-1031 to notify us that you intend to do a 1031 exchange.

Equity 1031, LLC will prepare an initial set of legal documents for your signatures to start the exchange process.  The documents enable you to place Equity 1031, LLC in the role of your Qualified Intermediary according to the requirements of IRC Section 1031.

Step 2: Put your property (relinquished property) on the market with a Realtor and request your Realtor to notify potential buyers that you intend to do a 1031 exchange. Use the example cooperative clause provided by us in the sale contract.

Equity1031, LLC will prepare a second set of legal documents according to the requirements of the IRC Section 1031 to enable Equity 1031, LLC to become a party in the sale contract on your behalf.

Step 3: Equity 1031, LLC will coordinate with the Realtors and and the escrow or closing agent to facilitate the exchange to closing.  Equity 1031, LLC will make sure that the proceed of the sale (exchange fund) of the relinquished property is transferred to a trust account on your behalf prior to the close of the relinquished property.

The exchange funds is saved in an individual account.  The individual account is separate from accounts of other exchangers. This protects your exchange funds because there is no comingling of funds.  Upon request, Equity 1031, LLC will provide you a bank statement indicating the account number with your name being associated with the account.

Step 4: Equity 1031, LLC will provide you a document to identify your replacement properties.  You will need to identify the replacement property or properties within 45 days from the close of the relinquished property.  Equity 1031, LLC will work with you if you need to change your replacement properties within the 45 days period.

Step 5: Once you decide to proceed with a replacement property, use the example coorperative clause provided by Equity 1031, LLC in your purchase contract.

Equity 1031, LLC will prepare a third set of legal documents according to the requirements of the IRC Section 1031 to accommodate including the replacement property in the exchange. Equity 1031, LLC will coordinate the exchange with the Realtors and the escrow or closing agent associated with the replacement property.

Step 6:  Equity 1031, LLC will provide you a funds transfer request form to enable you to instruct Equity 1031, LLC when and how much to transfer from your trust account for the purpose of obtaining the replacement property.

Based on your written request, Equity 1031, LLC will transfer funds from the trust account to the escrow agent.  Please note that, to protect your exchange funds, Equity 1031, LLC will only transfer funds upon receiving a written request signed by you.

Once all the funds are transferred out of the trust account to the closing company and the escrow is closed, the exchange is completed.

Equity 1031, LLC will provide you copies of all executed exchange documents for your records and tax filing purposes.

Note: It is important to keep in mind that the close of the replacement property needs to occur within 180 days from the close of the relinquished property. If there are multiple replacement properties, all have to be closed within the same 180 days period. No extension is allowed. Note that in some situations, a tax filing extension is necessary to maintain the 180 days period.

To protect your interest and the integrity of the exchange, Equity 1031, LLC is not allowed to give you specific legal or tax advice. Please consult with your attorney or tax accountant for specific advice about your situation.