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Please Contact your Senator TODAY


As many of you know, on June 27th, Senators Orrin Hatch (R-UT) and Max Baucus (R-MT) outlined a "Zero Base" plan for tax reform.

What this means is that the Senate's tax reform approach assumes from the start that all tax expenditures will be eliminated, including Section 1031. In a "Dear Colleague" letter, Senators Baucus and Hatch asked every member of the Senate to submit their own letter with a list of expenditures they wish to have placed back into the Code from the "zero baseline."

The Federation of Exchange Accommodators (FEA), the national trade association for 1031 exchange practitioners worked cooperatively with the leaders and lobbyists of the largest trade associations related to the real estate industry. A real estate industry-wide letter was sent to all senators supporting tax reform but calling on senators to preserve key expenditures, including section 1031. View Industry-Wide Letter.

The letter was sent on behalf of the following associations:

American Land Title Association

American Institute of Architects

American Resort Development Association

Appraisal Institute

Associated General Contractors of America

Building Owners and Managers Association International

CCIM Institute

Federation of Exchange Accommodators

Institute of Real Estate Management

International Council of Shopping Centers

Leading Builders of America

Mortgage Bankers Association

NAIOP, Commercial Real Estate Development Association

National Apartment Association

National Association of Home Builders

National Association of REALTORS�

National Association of Real Estate Investment Trusts

National Multi Housing Council

REALTORS� Land Institute

Society of Industrial and Office REALTORS�

The Real Estate Roundtable

WE NEED YOUR HELP.  We ask that you join this effort by contacting your senators. Sample language for a letter can be found below and can be cut and pasted into a letter or email. Click to find contact information for all senators.


Each senator's website has a Contact Me page upon which you can simply cut and paste the text of your letter and hit the send button. Alternatively, you can fax a letter to the Senator's office.  Please send your letters as soon as possible, ideally by this Friday, July 26, 2013, which is the deadline for senators to make their submissions to Senators Baucus and Hatch. Even if you can't meet that deadline, send it as soon as you can; your letter will still help. 


Your prompt action is appreciated. 


Sample Letter to U.S. Senators/Members of Congress

Senate Office Building

Washington, DC 20510

Re: IRC Section 1031 Exchanges

Dear Senator [LAST NAME]:

Building the growth of US industry is vital to the long term recovery of the US economy.  Over the years, both political parties have supported key elements of the tax code that assist in achieving this objective.  The objective of Section 1031 is very simple.  It allows the gain on the sale of certain qualifying assets to be deferred by using the proceeds of the sale of one asset to buy a replacement asset of the same kind or class.  This is not a tax avoidance scheme: tax will ultimately be payable, but only when the final asset in the chain is sold. Section 1031 stimulates a wide range of transactions and is critical to a multitude of industries, as well as real estate markets, which are only now tentatively recovering from the financial crisis.
I want to encourage you to strongly support Section 1031 to preserve its proven and substantial economic benefits.


I understand that Senate Finance Committee Chairman Max Baucus and Ranking Member Orrin Hatch have solicited you and your colleagues to provide feedback on what features of the tax code should be preserved in a comprehensive tax reform proposal. They have set July 26th as the deadline for receiving recommendations.


I believe that Section 1031 clearly meets the test laid out by Chairman Baucus and Ranking Member Hatch for sound tax policy. Section 1031 promotes economic growth and is fair. Section 1031:

  • Is neither a loophole, nor a tax savings vehicle, but rather a powerful economic engine based on sound tax policy.
  • Is an incentive that is available to, and used by, taxpayers of all sizes.  
  • Permits efficient use of productive capital and cash flow while allowing taxpayers to shift to more productive like-kind property, change geographic locations, diversify or consolidate holdings, or otherwise transition to meet changes in business needs or lifestyle.
  • Contributes significantly to the velocity of the economy and promotes investment in the U.S., encouraging owners of domestic real estate to reinvest in the U.S., rather than place their money in other or foreign investments.
  • Stimulates the economy, encouraging real estate transactions, and encouraging companies to replace and upgrade machinery and equipment, stimulating purchases and sales of machinery, equipment, railcars, aircraft, trucks and other vehicles sooner, because tax on the gain can be deferred.  


Chairman Baucus and Ranking Member Hatch suggest that the large volume of provisions added to the tax code since Congress enacted the last comprehensive tax reform bill in 1986 should be considered in the current tax reform effort. It is important to note that Congress preserved Section 1031 in the 1986 tax reform act. Indeed, it has been a part of the Internal Revenue Code since 1921.


I urge you to include preservation of Section 1031 Like-Kind Exchanges in your response to Chairman Baucus and Ranking Member Hatch's June 27th "Dear Colleague" letter soliciting your feedback on tax reform.


Thank you for your consideration of this critical issue.



 Thank you for your support!

We will continue to keep you updated in future newsletters. 


1031 Improvement Exchanges

Improving your 1031 Opportunities

Dealer Property

When completing a 1031 exchange, you must acquire replacement property with equal or greater value and equity than in the relinquished property.  Some Exchangers would like to make repairs, complete improvements or construct a new building on the replacement property using exchange funds.  An improvement exchange will allow exchange proceeds to be used to make such improvements but they must be completed before the Exchanger can take legal title of the replacement property.   


Improvement exchanges usually transpire when the fair market value of the replacement property is less than that of the relinquished property or it is essential for a business to relocate into its new facility before relinquishing the old one.  If the Exchanger simply acquires the replacement property and then constructs the improvements, the improvements would not qualify as like-kind property even if completed within the 180-Day Exchange Period and would be considered taxable "boot."  Typically, the Qualified Intermediary (QI) or an affiliate of the QI will take title to the replacement property directly from the seller, sign the contract with the builder and have the improvements completed. Once the improvements are completed, the QI conveys title to the Exchanger.

Read More

Connecticut Adopts QI Law 



Connecticut signed a Qualified Intermediary (QI) Law that takes effect on October 1, 2013.  Among other things, the laws places requirements on how a QI can hold exchange funds and requires certain amounts of insurance. Click to access the Public Acts and view the full law. Since both of these Public Acts contain more than the QI law, I have highlighted the QI sections in yellow. 1031 CORP. welcomes such laws and would be in compliance with this new law without changing any of our current exchange procedures.




Exchanging a California Property?

New Law To Track Replacement Property



California AB-92 added new sections 18032 and 24953 to the CA Revenue & Taxation Code.  Effective Jan 1, 2014, taxpayers that exchange a CA Relinquished Property for NON-California Replacement Property will be required to file an annual information return with the Franchise Tax Board (FTB) reporting this non-California property.  If the taxpayer fails to file the annual return, the FTB may estimate taxes due and assess tax, interest and penalties.  The Governor signed the law on June 27, 2013. View the Law



Trending this Month...  Clock
Last Minute Exchanges
There are more and more 1031 exchange transactions that are being initiated just a few days before the closing of the relinquished property. We are not sure why they are waiting until the last minute and we can certainly accommodate this. We can even do it if you are sitting at the closing table. However, whenever possible, we would like to provide the closing agent with as much notice as possible.
Wealth Building Webinars
Join us for our complementary Wealth Building Webinar Series designed to help you build and preserve wealth. Click on the link below for webinar descriptions and to register.


Thursday, August 1, 2013;  12:00 - 12:45 PM EST 

1031 Exchanges Made Easy 


Thursday, August 8, 2013;  12:00  - 12:45 PM EST  

Reverse & Improvement Exchanges: Preserving the Ability to Defer the Gain 


Thursday, August 15, 2013; 12:00  - 12:45 PM EST  

1031 Exchanges for Real Estate Professionals


Thursday, August 22, 2013;  12 - 12:45 PM EST

Advanced 1031 Exchange Topics


Thursday, August 29, 2013;  12 - 12:45 PM EST

1031 Exchanges as a Retirement and Estate Planning Tools

Message from our President
Margo McDonnell
Dear Friends,
It's been hard to keep up with everything related to tax reform. Thank you to everyone who has already sent a letter to your Congressional leaders. We are grateful for your support.
As 1031 exchange activity continues to increase, we are also seeing a renewed interested in education on 1031 exchanges. Not only are we seeing a greater number of registrants for our weekly Wealth Building Webinars designed to help participants build and preserve wealth but our exchange professionals have been asked to present a number of continuing education courses as well as refresher seminars. Everyone is thinking about 1031 exchanges again and we love it! You give us the opportunity to do what we love and we appreciate it. If you are interested in setting up a seminar for your team, please contact me.
Best Regards,
About 1031 CORP.
Serving as a nationwide qualified intermediary for 1031 tax-deferred exchanges since 1991, 1031 CORP. strives to provide a superior exchange experience for our customers and their advisors.  We provide our customers with enhanced security of funds, knowledgeable exchange professionals and a commitment to keep the exchange process simple for our customers and their advisors.  Every member of the exchange team is a Certified Exchange Specialist� and has the experience and expertise to facilitate even the most complex exchange transaction, including reverse, improvement and personal property exchanges.  Additional information can be found at www.1031CORP.com.
In This Issue
Tax Reform: Call to Action
1031 Improvement Exchanges: Improving your 1031 Opportunities
Connecticut Adopts QI Law
Trending this Month
Wealth Building Webinars
Message from our President
Article Exchange

Margo McDonnell

Margo McDonnell, CES
Certified Exchange Specialist
1.800.828.1031 ext. 212
Mobile: 610.680.6896
Find me on Facebook
View my profile on LinkedIn

1031 CORP. Logo

Sue Umstead, CES 
Certified Exchange Specialist
Senior Vice President
1.800.828.1031 ext. 208
Mobile: 610.755.8520

Find me on Facebook
View my profile on LinkedIn

1031 CORP. Logo

Marissa LoCascio, CES
Certified Exchange Specialist
Senior Exchange Officer
1.800.828.1031 ext. 210
Mobile: 610.742.4351

Find me on Facebook
View my profile on LinkedIn

Rich Heller

Richard Heller, Esq., CCIM, CES
Find me on Facebook
View my profile on LinkedIn

 Bettye Matthews

Bettye J. Matthews, CPA
View my profile on LinkedIn


Joseph F. Szajnecki, CES�
Article Highlighting Benefits of 1031 for City of Washington, DC


This Washington Post article highlights how city officials in Washington, DC are considering 1031 tax-deferred exchanges to help make a new major league soccer stadium a reality. One more example of the power of 1031 exchanges.   


Article Exchange

Following are articles related to 1031 exchanges, taxes, real estate and related topics you may find of interest.  


Housing Markets Where Cash is King

CNN Money

July 25, 2013


UPSIDE AHEAD: Office Recovery Accelerates In First Half, Best Yet to Come

CoStar Group

July 24, 2013      


Is It Too Late to Get a Good Mortgage Rate? 

National Association of REALTORS


July 22, 2013


'Missing Households' Represent Big Source of Pent-Up Demand  

Inman News

July 24, 2013


Philadelphia Housing Market Gaining Momentum

Philadelphia Business Journal 

July 25, 2013 


If you have an article you would like to share, please forward it to Margo McDonnell,CES� and we'll include it in next month's reading list.
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