1031 Exchange - How to Acquire Properties

By Ellen Gentry

This article will focus upon the use of a qualifying intermediary and identify the work which is done by these companies. It will also give a short and simple breakdown on the fees most often charged by qualifying intermediaries.

This paragraph will explain the technical work of a qualifying intermediary. The qualifying intermediary prepares the legal paperwork related to the 1031 tax exchange as well as documents related to the transactions: both the selling of your old property and the purchasing of your replacement property. These documents can also be used to properly structure the 1031 exchange. The qualifying intermediary is also the escrow agent in this process as the company will receive and hold your funds from the sale of the old property until you purchase the new property. The company will also act as a consultant due to helping you meet the guidelines for purchasing your replacement property. This is a great deal of responsibility for one company so be sure to choose wisely.

This paragraph will focus upon fees which may be charged by your qualifying intermediary.
Doing a simple 1031 tax exchange will normally be the cheapest with fees normally between four hundred and six hundred dollars. With your 1031 exchange, you are allowed to buy up to three properties and the second and third properties will often incur a fee of roughly a couple of hundred dollars each. A quick turnaround time may cost money and a 1031 reverse exchange often is the most costly with a fee that can run into several thousand dollars.

Hopefully this article on a 1031 exchange and the understanding of the technical side from the qualifying intermediary gives you a sense of what must be done from their end as well as the types of fees you can incur. This should give you a good sense of what to look for when choosing a qualifying intermediary as well.

Ellen writes for Great Hawaii Real Estate where you can find Molokai real estate listings to great Molokai homes, condos and land.