Monarch Title 1031 Exchange Service
Monarch Title has served as an experienced and trusted advisor for property exchange services for the past 20 years. Our experience and expertise ensure a smooth operation for any client property need. As part of our commitment to our clients, we are pleased to offer 1031 exchange services.
Capital gains tax can take a serious bite out of your investment profits. We completely understand when our real estate investor clients want to not only protect their potential earnings but to capitalize on their investment.
From the start of the old property’s sale, 1031 financial transactions must go through a qualified intermediary. As the intermediary, Monarch Title performs the following tasks:
- Attorney prepared 1031 exchange legal documents
- Holding and disbursing the exchange funds during the transaction
- Coordinating the overall exchange between all involved parties including the escrow officer and closing agent.
The complicated and often confusing jargon of the Internal Revenue Code makes it vital to hire a qualified professional to assist in filing a 1031 exchange. This is one piece of paperwork you do not want to misfile. Our work as a qualified 1031 exchange company saves our clients countless headaches and dollars yearly.
At Monarch Title Company, we are always available to assist anyone with 1031 exchange questions.
What is a 1031 Exchange?
A 1031 exchange refers to the U.S. Internal Revenue Code (IRC) section 1031. Simplified, a 1031 exchange, also called a kind exchange, trades one investment property for another. A successful 1031 exchange allows an investor to sell or reinvest a property while lowering or deferring capital gains tax. This savings frees up capital for investments within the replacement property.
1031 exchanges follow usually four common forms:
- Delayed exchange: The most common type of exchange. Occurring within 180 days, the relinquished property is first sold followed by a purchase of replacement property.
- Simultaneous exchange: A simultaneous exchange occurs when the replacement property and relinquished property close on the same day.
- Improvement exchange: This exchange takes place over 180 days. The real estate investor can use their tax-deferred money to improve the replacement property while it’s in the control of a qualified intermediary.
- Reverse exchange: Buy first, pay later. This exchange occurs when an investor acquires a replacement property before their property is sold.
Contact Monarch Title Company with any inquiries.
1031 Exchange Rules
Inside 1031 exchange services regulations, the IRS requires an investor to designate a replacement property in writing to the qualified intermediary within 45 days. While an exchanger can identify more than one replacement property, some rules must be followed to prevent any snafus in the process.
- The Three Property Rule: You can identify up to three replacement properties regardless of their fair market value.
- The 200 Rule: The value does not exceed 200 percent of the aggregate fair value of all relinquished properties.
- The 95% Rule: Properties acquired must amount to at least 95 percent of the fair market value of all identified properties.