Every exchange is different, but there are a few universal tips that will help ensure a smooth process from start to finish:
- Make sure that the property you are selling (Relinquished Property) and the property you are purchasing (Replacement Property) qualify as investment/business use property. If you are not sure, give us a call, and we can provide you with some information to help you make that determination.
- Remember that the taxpayer on title to the Relinquished Property (individual, trust, corporation, etc.) is the taxpayer that needs to acquire and take title to the Replacement Property.
- Make sure you have a Qualified Intermediary (QI) in place prior to closing the first transaction. Many of the exchanges we get are oftentimes last-minute exchanges because the taxpayer does not realize that they need a QI until they are at the closing. Taxpayers mistakenly assume that if they tell their Realtor® or title closing agent that they want to do an exchange, then the Realtor® or title agent will make sure it gets set up. The responsibility for setting up the exchange is solely on the taxpayer.
- Speaking of Realtors® and title closing agents, make sure that you do keep them in the loop of what your plans are so that there aren’t any last-minute surprises or unexpected delays.
These are just a few tips to hopefully help you and your team when planning for an exchange. Midland 1031 will be there every step of the way to ensure that your exchange process is as smooth as possible.