An Exceptional Exchange Experience, Made Easy. |
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Taking Cash from Your Exchange?
Smart Strategies Can Accomplish Your
"Trade Down" Goals
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To satisfy 1031 exchange requirements and maximize the deferral, an exchange taxpayer must purchase a replacement property of equal or greater value and equity. Miss either of these criteria and you have a “trade down” and proceeds that become a taxable liability, known as “boot.” However, you can use tax strategies to accomplish your ultimate goals, whether to have cash to improve the replacement property, pay a tax bill, diversify a real estate portfolio, leverage debt, or afford another expense.
If the need for cash is the driving the decision to “trade down” in property value, exchangers have options that allow you to meet core goals for the sale, without making a dent in the investment, while satisfying Section 1031’s requirement of a continuous investment in real property.
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A trade down in property value or equity produces cash "boot" and a taxable event. But, there are strategies that can accomplish your goals without cash--while you retain the value of your investment. |
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Upcoming Webinars
>> Thursday, June 1, 2023
12:00 Noon Eastern
>> Thursday, July 6, 2023
12:00 Noon Eastern
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1031 CORP. provides an easy-to-follow overview of 1031 tax-deferred exchanges and their many benefits. We'll also review the requirements of a successful exchange and the essential role of 1031 CORP. to keep the exchange transaction simple for all parties and wrap up with questions and answers. |
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1031 CORP. Advocates for Exchanges |
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The Federation of Exchange Accommodators (FEA), the national trade association for Qualified Intermediaries, hosted its annual Hill Visits Fly-in. 1031 CORP. team members and industry peers spoke with 70 legislative offices about the benefits of 1031 exchanges.
Advocacy is an important protection for Section 1031. Send letters of support to your Members of Congress.
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Photo: 1031 CORP. team members and 1031 industry peers pose between visits to legislative offices during the FEA Fly-in, April 2023. |
1031 CORP. Joins Peer QIs on Capitol Hill
The 1031 CORP. team spent a day with industry peers in Washington, D.C. advocating for Section 1031 as part of the Federation of Exchange Accommodators’ (FEA) Mid-Year Meeting and Capitol Hill Visits. The April event included a day of continuing education and a day meeting with Members of Congress. The 1031 CORP. team included Marissa LoCascio, Lucas Ecklund-Baker, and Sue Umstead. In total, 1031 exchange industry peers met with 70 legislative offices. The teams discussed the impact on investors, business owners, and tenants. They delivered the message that exchanges keep the real estate market moving, drive economic growth in communities across the country, and create opportunities and benefits for the national economy.
Proposals to limit Section 1031 to defer no more than $500,000 in capital gains have been floated by the Biden Administration as part of the discussion on the debt ceiling and as part of the 2024 Budget Proposal for the Federal government. Proposals for limitation and repeal have consistently put Section 1031 at risk over the course of many administrations. Advocacy and education are integral to the survival of 1031 exchanges.
If you would like to learn more about the impact of 1031 exchanges on the local, state, and national economies, or would like to share your 1031 story with your legislator, visit the FEA advocacy site, www.1031buildsamerica.org. Please take a minute to send a letter to your Congressional leaders asking them to keep Section 1031 in its current state.
1031 CORP. has been a member of the Federation of Exchange Accommodators since 1995. FEA is the only trade association representing Qualified Intermediaries and is a leader in advocacy for Section 1031 like-kind exchanges.
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Schedule a 1031 Presentation |
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The 1031 CORP. Exchange Team is available to present seminars, webinars, and continuing education courses on 1031 exchanges, their many benefits, and the requirements of a successful exchange to your association or groups.
Our team will tailor the presentation to your audience and time schedule.
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Grace Rivera, CES®
Reverse 1031 CORP.
Vice President
Exchange Officer
(610) 792-4880 ext. 219
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Grace Rivera, CES®
Role: Exchange Officer; VP, Reverse 1031 CORP.
Location: Collegeville, Pennsylvania
What are reverse 1031 exchanges and improvement exchanges?
Reverse exchanges are designed for exchangers who must acquire replacement property before the relinquished property is sold. You cannot own both the old and new properties at the same time, so our sister company, Reverse 1031 CORP., takes title to satisfy the requirements of the exchange. They are useful when you need to purchase the replacement property quickly. They are generally more complex and costly than a standard exchange.
An improvement exchange is an arrangement where proceeds from the relinquished property are used to pay for capital improvements on the replacement property within the 180-Day Exchange Period. It allows the exchanger to include the value of the improvements in the exchange. You can put the proceeds to work without directly holding the funds.
Both reverse exchanges and improvement exchanges require an Exchange Accommodation Titleholder (EAT)—a separate entity that takes title to the relinquished and replacement properties during the exchange period. This process is known as a “parking arrangement” that ensures that you comply with the rule that an exchanger cannot be in receipt of the funds during the exchange transaction.
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Poll: I would consider taking boot and pay tax. |
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Please select only one answer. Poll results will be reported next month.
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I would consider paying boot if it meant I saw some cash proceeds.
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Yes, if it helped further my goals.
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Yes, paying partial tax is better than the entire bill.
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No, unless I couldn't find another way to accomplish my goals.
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No, I would always maximize the full deferral, no matter what.
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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 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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