WE PROVIDE THE INFORMATION YOU NEED
TO HELP YOU ACHIEVE YOUR OBJECTIVES.
National 1031 Exchange Services (NES) acts as a third-party Qualified Intermediary in an exchange. As a principal in the transaction, National acquires the Relinquished Property (the property you currently own) and transfers the property to the buyer. National receives the sales proceeds at the close of escrow and holds those funds for the Exchanger to acquire the new Replacement Property.
National cares about security of your funds. Our documentation clearly defines the role and responsibility of NES as an accommodator in helping the Exchanger to complete their exchange. Funds are invested with the trust department of a major commercial bank for safety and protection. Special accounts requiring co-signors are available if desired.
A Tax-Deferred Exchange represents a method for selling qualifying property or properties and the subsequent acquisition of another qualifying property or properties within a specific time frame.
WHY CONSIDER A 1031 EXCHANGE?
There are many advantages to structuring your investment transaction as 1031 Exchange.
1. Selling the Relinquished Property – before the close of escrow on the relinquished property, it is necessary for the taxpayer to contact the Qualified Intermediary.
2. The Qualified Intermediary will prepare an Exchange Agreement and contact the closing agent.
3. Upon the close of escrow on the relinquished property, the funds will go directly to the Qualified Intermediary and will be held over the course of the exchange.
You must own each of the relinquished and replacement two years. Then when you go to sell the primary residence that came from a 1031 Exchange, you must be on title for at least 5 years. The longer you live there, the bigger the proration gets. However, the recapture from depreciation recapture doesn’t go away.
To illustrate the change let’s assume married taxpayers exchanged into a residence; rented it for three years, moved into it and lived in it for two years. The taxpayers then sold it and realized a gain of $500,000
the exclusion would be prorated between the qualified and nonqualified use (the numerator is the period of nonqualified use and the denominator is the number of years the property has been owned):
You cannot buy from a related party unless the related party is also doing an exchange
When selling to related party, the related party must hold the property for two years or it will disallow your exchange.
The definition of related parties is a combination of related parties as defined pursuant to Sections 267(b) and 707(b) of the Internal Revenue Code. Related parties include, but are not limited to, immediate family members, such as brothers, sisters, spouses, ancestors and lineal descendants. Related parties do not include stepparents, uncles, aunts, in-laws, cousins, nephews, nieces and ex-spouses.
Corporations, limited liability companies or partnerships in which more than 50% of the stock, membership interests or partnership interests, or more than 50% of the capital interests or profit interests, is owned by the taxpayer is considered to be a related party.
An Internal Revenue Code Section 1031 Tax Deferred Exchange represents a legal strategic method for acquiring or selling “Like-Kind” or qualified properties in order to defer capital gains tax. If the Taxpayer meets the prescribed criteria as established by the Internal Revenue Service (IRS), then capital gains taxes may be deferred by “Exchanging” property.
National 1031 Exchange Services handled my 1031 from my properties in three different locations to purchase one replacement property. National’s staff is very knowledgeable. they were always available and ready to answer all of the questions I had. had (and there were many). I would highly recommend them to all my friends, family and business associates.
We look forward to working with you. Please complete the form below if you have any questions.