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  exchange process
 
 

As your Qualified Intermediary (QI), we will guide you through the Exchange Process.
 

There are STRINGENT IRS regulations that must be followed in order to derive the benefits of a Section 1031 tax-deferred exchange.  The following are requirements that must be satisfied in order for your transaction to qualify as a tax-deferred exchange.

 

The property which you are giving up (the "Relinquished Property") must be used in your trade/business or held for investment, and not for personal use.
   

The property which you plan to acquire (the "Replacement Property") must also be used in your trade/business or held for investment, and not acquired for personal use.
   


In order for the exchange to be entirely tax-deferred, the purchase price of the Replacement Property must equal or exceed the selling price of the Relinquished Property, and you must not receive cash at the closing of the Relinquished Property. Any cash or other "unlike-kind" property received in the exchange is named "boot" and will be fully taxable, without regard to any basis which you may have in the Relinquished Property.
 
   
The sales proceeds of the Relinquished Property must not be actually or constructively received by you before the purchase of the Replacement Property. These funds must be held by a Qualified Intermediary and/or in a Qualified Escrow Account or Qualified Trust.
 
   
   

a

 Title to the Replacement Property must be taken by the identical owner of the Relinquished Property.  For example, if John Smith sells Relinquished Property in the exchange, then John Smith must take title to the Replacement Property, rather than his partnership, corporation, trust, or his son/daughter.  The Replacement Property should not be transferred by John for at least one year following the exchange.
 
   
a
 45-Day Identification Period.  From the sale date of your “Relinquished Property" you have 45 days to identify the properties you may want to buy and provide the list to your Qualified Intermediary.  There are no exceptions to this deadline. 
 
   
a

 180-Day Exchange Period.  From the sale date of your “Relinquished Property" you have 180 days to close on the purchase of one or more "Replacement Properties" identified during the 45-day identification period.  There are no exceptions to this deadline.
 
   

 
  DELAYED EXCHANGE SEQUENCE OF EVENTS
   
    1) Exchangor & Nationwide 1031 Exchange Services (QI) execute an Exchange Agreement
     
   

2) Exchangor sells Investment Property (Relinquished Property)
    Proceeds from the sale (Exchange Funds) are wired directly to (QI)
    Exchange Funds are held by (QI) until the exchange is complete
     
   

3) Exchangor must identify property to purchase (Replacement Property) within 45 days of sale date 
     Exchangor must notify (QI) of identified property by this deadline
     
   

4) Exchangor has a maximum of 180 days from the sale date to purchase the Replacement Property
    (QI) will wire Exchange Funds directly to the closing for the Replacement Property purchase
     
   

5) Exchange Complete
   
   
   
 
Nationwide 1031 Exchange Services is a Member of the FEA (Federation of Exchange Accommodators) and is bonded and insured. The information contained in this communication is not intended or written to be used, and should not be used for the purpose of avoiding tax-related penalties or promoting,marketing or recommending to anyone tax-related matters addressed within this communication.
   
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