Cybersecurity Awareness Month | |
Cybersecurity in 1031 Exchanges:
What You Need to Know to Stay Safe
When it comes to real estate transactions, especially 1031 exchanges, cyber threats are a growing concern. You might think cyberattacks only happen to big companies, but individuals like you are also targets—especially when large sums of money are involved. Let’s break down the basics of cybersecurity and how you can protect yourself during the process.
Why Cybersecurity Matters in Real Estate
Every day, hackers are looking for ways to steal your personal information and your money. Real estate transactions, like a 1031 exchange, are particularly attractive to cybercriminals because of the large amounts of money moving between parties. These criminals use tactics like social engineering and email eavesdropping to trick you or intercept your data, often without you even knowing.
Common Cyber Threats in Real Estate Transactions
- Email Eavesdropping: Hackers can intercept your emails and alter information while it’s being sent from one person to another. This can lead to stolen personal information or even unauthorized changes to important details, such as wiring instructions.
- Social Engineering: This is when a hacker pretends to be someone you trust—like a real estate agent or your 1031 Exchange Officer—to trick you into giving them sensitive information or sending money to the wrong place. Their emails may look legitimate, but they're designed to deceive you.
How 1031 CORP. Protects You
At 1031 CORP., we take cybersecurity seriously. Here are just a few ways we’re keeping your information safe:
- Encrypted Emails: All of our internal emails are encrypted, meaning no one can read them if intercepted. For external communications containing personal identifiable information (PII), we send those through secure, encrypted channels to ensure your data stays protected.
- Endpoint Detection and Monitoring: We use advanced tools to monitor for suspicious activity, protecting your emails and web interactions from threats.
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External Email Warnings: To help identify potential threats, we label all emails coming from outside 1031 CORP. with (EXTERNAL) in the subject line. This alerts our team to be extra cautious when opening or responding to those messages.
- Software-Defined Perimeter: Our network is protected by a software-defined perimeter which hides our internet-connected infrastructure from unauthorized users. It’s like making servers invisible to anyone who shouldn’t be accessing them.
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Disaster Postponements for 1031 Exchanges | |
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If a federally declared disaster impacts your 1031 exchange, you may qualify for an extension on the standard 45-Day Identification and 180-Day Exchange Period deadlines. Postponements are not automatic and apply only when the IRS issues a Notice or News Release listing affected areas. Please check the IRS website for updates. Postponements are available for both reverse and delayed exchanges.
Who is Eligible for Postponements?
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Affected Taxpayer: Defined under IRS regulations, including those living in or with a business in a disaster area, regardless of the location of the exchange properties. Relief workers assisting in the disaster area may also qualify.
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Other Taxpayers Facing Difficulties: Even if not directly in the disaster area, you may qualify if:
- The relinquished or replacement property is in a covered disaster area.
- Any party involved in the exchange (qualified intermediary, settlement attorney, lender, etc.) is located in the covered disaster area.
- A key party is injured, missing, or killed due to the disaster.
- Important documents or records are destroyed by the disaster.
- A lender refuses funding due to disaster-related issues.
- A title insurance company is unable to provide the necessary policy.
Timeline Extensions
If eligible, under Revenue Procedure 2018-58, you will receive the longer of two options:
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A 120-day extension from the original deadline, or
- The deadline date specified in the IRS's General Postponement for the disaster.
Visit our website for a list of the most recent disaster extensions.
Please contact your 1031 CORP. Exchange Officer immediately if you believe your exchange may be affected. Early communication is crucial, especially if the disaster area isn’t where your properties are located.
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1031 Exchanges
Made Easy
Thursday, November 7, 2024
12:00 p.m. Eastern
Register
Join us for our "1031 Exchanges Made Easy" webinar, designed to provide you with a comprehensive yet straightforward overview of 1031 exchanges. We will also review the powerful benefits of 1031 exchanges. This session is perfect for real estate investors, business owners, their advisors and anyone interested in understanding the benefits and requirements of 1031 exchanges.
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Unlocking the Potential of
1031 Exchanges & DSTs
Thursday, November 21, 2024
12:00 p.m. Eastern
Register
Discover strategies to overcome challenges of 1031 exchange situations by joining our comprehensive webinar on reverse and improvement 1031 exchanges. Designed for real estate investors and professionals, this session will provide knowledge and tools to successfully navigate complex exchange scenarios. Our experts will guide you through the intricacies of exchanges and demonstrate the solutions you need.
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ACT NOW! Urge Congress to Protect 1031 Exchanges! | |
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Act Now: Urge Congress to Protect 1031 Exchanges!
As key provisions of the Tax Cuts and Jobs Act of 2018 are set to expire at the end of 2025, there is growing momentum in Washington to address our tax code. Regardless of the results of the upcoming election, a new tax bill is expected to be signed into law by the end of next year. Now more than ever, it's critical to ensure that Section 1031, which has long supported our economy, remains intact.
Your Voice Matters.
Like-kind exchanges are vital to job creation, economic growth, and investment in communities across the country. To protect Section 1031 in its current form, we need your help. Please take just a few minutes to send a strong message to your U.S. senators and representatives urging them to support the retention of 1031 exchanges. With just one click, you can send a prewritten message—or feel free to personalize it and share why 1031 exchanges matter to you.
Why It’s Critical to Act:
A May 2022 study by Ernst & Young (EY) highlights the essential role that like-kind exchanges play in the U.S. economy:
- Support American Jobs: In 2021, 1031 exchanges helped sustain 976,000 jobs and generated $48.6 billion in labor income.
- Boost U.S. GDP: Like-kind exchanges added $97.4 billion to U.S. GDP in 2021. Repealing §1031 would slow economic growth, shrink investment, and reduce GDP.
- Contribute to Tax Revenue: 1031 exchanges generated $13.1 billion in federal, state, and local tax revenue in 2021, including $8.2 billion for the federal government. Additionally, $6 billion in taxes are paid annually from foregone depreciation on replacement property.
- Increase Investment: Exchanges drove $7.5 billion of investment in 2021, facilitating capital reinvestment that spurs job growth and consumer spending across multiple sectors.
- Encourage Business Growth: Section 1031 removes barriers to transferring property, allowing businesses to grow, relocate, and expand more efficiently.
Section 1031 is a cornerstone of our economic success. Don’t let it be chipped away in the coming tax overhaul. Take action now!
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Federation of Exchange Accommodators (FEA) Annual Conference | |
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1031 CORP. Exchange Team members, Marissa LoCascio, Yahaira Dillen, Margo McDonnell, and Laura Markham had a great experience at the 35th Annual Federation of Exchange Accommodators (FEA) conference in Austin, TX! FEA provides a unified voice for professionals navigating the complexities of 1031 exchanges and works to better serve the industry.
Our team enjoyed learning, collaborating, and working alongside other professionals to advocate for the 1031 exchange industry at the conference!
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Each year at the FEA Annual Conference, the CES® Council presents the Margo McDonnell Certified Exchange Specialist® Perpetual Award for Outstanding Service named after 1031 CORP.'s President. The award was awarded and dedicated to Margo in 2008 for spearheading FEA's efforts to launch the Certified Exchange Specialist® Program. Each year, the Margo McDonnell Certified Exchange Specialist® Perpetual Award for Outstanding Service recognizes a Certified Exchange Specialist® in good standing who has demonstrated extraordinary service to the 1031 exchange industry. Pictured below is Margo with this year's award winner! | Pictured below is the FEA Board of Directors with 1031 CORP.'s Marissa LoCascio (fourth from right), who began her 5th year on the Board. Marissa also chairs the FEA Ethics Committe and serves on the Government Affairs Committee. | |
Team Spotlight: Christine Mesaros | |
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Christine
Mesaros
Exchange Banking Manger & IT Manager
Collegeville, PA
(800) 828-1031
ext. 218
Email Christine
Connect on LinkedIn
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Can you share a situation where a client’s funds were at risk due to a cyberattack, and how 1031 CORP.’s safeguards prevented a potential loss?
One of our Exchange Officers had been communicating with a closing agent via email over the course of several days. The Exchange Officer received an email from the closing agent containing the closing and wiring instructions. However, upon opening the email, she immediately noticed something was off. The language used in the email differed from the agent’s previous communications, and the payee on the wiring instructions didn’t seem right. The Exchange Officer promptly contacted the Title Agent to verify the information and discovered that the wiring instructions were indeed fraudulent. It was confirmed that the Title Agent’s email had been hacked, and a hacker had been posing as the agent. By applying 1031 CORP.'s policies and security training, the Exchange Officer quickly identified the fraudulent email and took the appropriate steps to alert the Title Agent. Had the Exchange Officer not confirmed the email with the Title Agent, the funds could have been mistakenly sent to the wrong account, resulting in their loss.
What are some of the most common mistakes people make when handling sensitive information online during real estate transactions?
Handling sensitive information online during real estate transactions requires extra care because of the large sums of money involved and the extensive personal data exchanged. A common mistake our client’s make is to send sensitive information like W9s and Driver’s Licenses via unencrypted email, messaging apps, or other unsecured platforms. Cybercriminals can intercept unencrypted communications, leading to identity theft, fraud, or financial loss. Use encrypted email services, secure document sharing platforms, or secure client portals for exchanging sensitive data.
1031 CORP.’s policies for protecting our clients' Personally Identifiable Information (PII) include storing it in a secure folder with access limited to a select group of key employees. Additionally, emails containing PII are permanently deleted, and files with PII are removed from all locations, except for the secure folder where they are safely retained.
What advice would you give someone who primarily conducts financial transactions on public or unsecured Wi-Fi networks?
DON’T DO IT! Public Wi-Fi is considered not secure for several reasons, mainly due to the lack of encryption and the ease with which malicious actors can exploit it. If you need to make financial transactions on the go, using your mobile data (cellular network) is generally more secure than public Wi-Fi. Cellular networks are typically encrypted, providing better security than unsecured public Wi-Fi.
1031 CORP.'s policy requires employees to avoid using public Wi-Fi. Employees with company phones rely on cellular data, and all are provided with personal hotspots to use when secure Wi-Fi is unavailable.
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Exchanging Thoughts Blog
Check out Exchanging Thoughts, the 1031 CORP. blog, for more timely posts about 1031 exchanges and related topics.
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Poll: What aspect of 1031 exchanges do you find most valuable when it comes to the protection of 1031 exchanges? | |
| Please select only one answer. Poll results will be reported next month. | | | |
September Poll Results: Has the recent change in interest rates altered your plan for selling and acquiring new investment properties? | |
Your poll answers from the September issue of Exchanging Times®. | |
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Serving as a nationwide Qualified Intermediary for 1031 tax-deferred exchanges since 1991, 1031 CORP. strives to provide an exceptional exchange experience made easy for our clients and their advisors. We provide our clients with enhanced security of funds, knowledgeable exchange professionals and a commitment to keep the exchange process simple for our clients and their advisors. Our Exchange Team, which includes Certified Exchange Specialists®, has the experience and expertise to facilitate even the most complex exchange transactions, including reverse and improvement exchanges.
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