1031 Exchange Resources for Title & Closing Agents and Attorneys

Help Your Clients Defer Taxes with 1031 Exchanges

If your client has investment property, they may qualify for a 1031 exchange to defer taxes on gains.

Being knowledgeable about 1031 exchanges can enhance your reputation and lead to more referrals from satisfied clients. It can also increase your own transactions with the sale of one property and purchase of another within a 180-day period while providing value to your customer in potential tax savings.

Equity 1031 Exchange acts as a Qualified Intermediary (QI) to handle these exchanges.  To learn more, download our 1031 exchange guide for real estate professionals or book a meeting

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Frequently Asked Questions (FAQs)

Who signs the closing documents?

The Exchanger would sign the documentation similar to a standard real estate transaction in which no exchange was involved. Equity 1031 Exchange would only sign the closing settlement statement as the QI for the Exchanger.

Your documentation references that the contract has been assigned to you as the QI. Am I to prepare a deed from the Exchanger to you, and another from you to the new buyer?

 No, you will prepare the deed directly from the Exchanger to the buyer.

Where do we send the proceeds?

The proceeds are to be wired directly to the QI to hold in escrow on behalf of the Exchanger.

The Exchanger has advised that they want to take some funds at closing. Is this OK?

Those funds may be taxable to the Exchanger, but they are allowed to take some of the funds at closing. There would need to be a line item referencing the cash disbursed to the Exchanger. A separate line item will be for the 1031 proceeds going into the exchange.

The Exchanger has advised that they will be taking title of the new purchase in the name of an LLC, which is different from your documentation/instructions. What is the proper protocol?

Advise Equity 1031 Exchange of the LLC as soon as possible. That way, we can address it with the Exchanger. It is imperative that the Exchanger maintain continuity of taxpayer throughout the exchange. Changing the taxpayer on the replacement property acquisition could jeopardize the transaction.

You are holding more money than we need for closing. Can the excess be disbursed to the Exchanger at closing?

Equity 1031 Exchange will only send funds needed for closing. Any excess funds will be disbursed to the taxpayer by the QI at the appropriate time. Any funds returned to the client may be taxable, so it is important to apply for as many funds as possible. There are a couple of options:

  • If the Exchanger provided the earnest money deposit with personal funds, we could replace that amount with some or all of the overage.

  • If the Exchanger is obtaining financing on the new purchase, they should seek to reduce the loan amount. In doing so, all of the proceeds apply towards the purchase.