By Admin
1031 Guide
This represents a comprehensive 1031 guide from beginning to end and everything in between...
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UNSURPASSED EXPERTISE | 24/7 VISIBILITY
THE MODERN WAY TO 1031 EXCHANGE
Changing the 1031 Experience
We've brought together resources, technology and security
We've brought together the educational resources, the latest in processing technology, data and 1031 funds security, and client visibility to provide an unparalleled experience for Exchangers from coast to coast.
In 2018 we set out to define what a modern end to end 1031 exchange processing solution should really look like for our clients and the settlement industry partners we support. After architecting the solution, we went out and found the best technologies and tool sets available to us in Silicon Valley. We then integrated those technologies into an end to end solution that provides our clients with a completely modern, efficient, and secure 1031 exchange process.
Today Fyntex leads the industry with the first secure, world class transactional experience for our Exchangers as well as for our strategic partners throughout the country.
The Smart Way to Exchange
Everything an Exchanger needs, in one place
- Free planning via Zoom videoconference
- Fast exchange documents
- Secure 24/7 Exchanger visibility
- Qualified Trust Accounts for all funds
- Online identification wizard
- Investment grade replacement properties
Unsurpassed Exchanging Expertise
The team we gathered to support the 1031 Resource Center are all long time tax deferred exchange veterans, easily capable of answering your questions or assisting with the most complex 1031 planning.
State of the Art Processing
Fyntex has developed a proprietary processing platform which streamlines the exchange process while it also increases data security and visibility for Exchangers.
Secure 24/7 Visibility
Having regular access to your exchange documents as well as your 1031 exchange proceeds on deposit is critical for every Exchanger. Our secure portal provides every Exchanger and their Advisor with their own secure workspace.
Absolute Funds Security
Fyntex is one of a very few Qualified Intermediaries using Qualified Escrow Accounts for every exchange. This security regimen requires the bank to guarantee ready access to your funds and represents the safest method for having your funds with any Intermediary.
Process
The key steps to a successful 1031 exchange
Follow these steps to ensure a compliant and seamless tax deferred transaction.
- 01
1031 Planning
Organize the transaction
- 02
Exchange Setup
Prepare for closing
- 03
Relinquished Property Closing
Start your 180 day exchange period
- 04
Replacement Identification
Identify within the first 45 days
- 05
Replacement Closing
Completing the exchange and 1031 reporting
Prepare Your 1031 Plan
Every 1031 exchange deserves to be planned beforehand. This will give you an opportunity to anticipate the various closing logistics and engineer specific workarounds which will make the entire transaction move more smoothly.
Also, don't forget that the Internal Revenue Service allows you to exchange your tax basis from one qualifying property to another because you are moving your equity and debt. That said, here's the cheater's math for exchanging: if you want a totally tax deferred transaction you'll need to do three things: 1) buy a replacement property which is equal to or greater than your net selling price, 2) move all equity from the old property to the new, and 3) replace your debt. To the extent you don't accomplish all three, you will likely owe tax on the difference.
Setup your exchange before closing
The IRS requires that every exchange must be setup prior to the closing of the Relinquished Property. This means selecting a Qualified Intermediary who will generate the exchange related paperwork when you sell and when you buy, as well as hold your hard earned exchange proceeds in trust for you during the 180 day exchange period.
The Qualified Intermediary cannot be someone with whom you have had an existing relationship and you should ensure that whatever Intermediary you select will properly secure your cash while on deposit. This is because while your funds are on deposit the exchange proceeds technically belong to the Intermediary. This is one reason why Fyntex only utilizes Qualified Escrow Accounts, in which your funds cannot possibly be moved without your explicit written authorization as well as that of a bank officer.
Close the Relinquished or Sale Property
When preparing your exchange documents for the sale of your Relinquished Property it is important that your Qualified Intermediary be properly assigned the stead of the Seller in the Purchase and Sale Agreement. This, together with being shown as the Seller on the Settlement Statement or Closing Disclosure, assists in memorializing this first transfer as part of an overall tax deferred exchange.
When the closing or settlement of your Relinquished Property sale occurs, your exchange proceeds are forwarded to your 1031 trust account and your 45 and 180 day clocks start for your identification period and total exchange period.
Identify potential Replacement Properties
The IRS requires that you identify candidate or targeted Replacement Properties within 45 days of your Relinquished Property closing. In addition, an Exchanger must utilize some specific rules when identifying.
1) The Three Property Rule dictates that the Exchanger may identify three properties of any value, one or more of which must be acquired within the 180 Day Exchange Period. 2) The Two Hundred Percent Rule dictates that if four or more properties are identified, the aggregate market value of all properties may not exceed 200% of the value of the Relinquished Property. 3) The Ninety-five Percent Exception dictates that in the event the other rules do not apply, if the replacement properties acquired represent at least 95% of the aggregate value of properties identified, the exchange will still qualify.
These identification rules are absolutely critical to any exchange. No deviation is possible and the Internal Revenue Service will grant no extensions.
Close all Replacement Properties and report your exchange to the IRS
Once you've completed the acquisition of all your Replacement Properties within your 180 day exchange period your exchange is technically complete. This means that you can determine your new adjusted basis and report your exchange on your next tax return.
Your exchange needs to be reported on IRS Form 8824. It is a one page form where you detail the properties you sold, the properties you acquired, and the status of your new adjusted cost basis as well as any tax owed on capital gain or depreciation recapture.
Tutorials
Helpful 1031 Exchange Tutorials
Here are two 1031 exchange related resources which will help you in your decision making process.
By Admin
Keys to 1031
This interactive tutorial highlights the twelve keys which every experienced Exchanger abides by religiously...
Read moreEasy 1031 Exchange Math
How much replacement property should you buy?
It is important to understand how the math associated with a 1031 exchange can impact your ownership. A completed 1031 exchange not only defers capital gain and depreciation recapture taxes, it also dramatically increases your buying power as well.
When considering a Replacement Property you need to know how much property value to acquire to successfully defer your capital gain and depreciation recapture taxes. Our wizard will help you determine your ideal net purchase price, cash downpayment and the amount of debt you'll need to have a totally tax deferred transaction.
Multimedia
1031 Tutorial Videos
Helpful multimedia tutorials divided by subject.
It only takes fifteen minutes
Speak with a 1031 expert via Zoom videoconference
While the logistics of 1031 exchanges have been streamlined dramatically since tax deferred exchanging was incorporated into the Internal Revenue Code in 1921, it is still critical for every Exchanger to have timely access to expert advice when they need it.
That is why we always have a senior Fyntex 1031 expert available to answer your questions. Allow one of our experts to assist you through a brief Zoom videoconference or by telephone at 844-655-1031.
