1031 Proceeds

The act of selling a property and walking away from the closing table empty handed can be uncomfortable for anyone new to 1031 Exchanges. Remember that the Qualified Intermediary will be responsible for the safety and management of your sales proceeds for up to 180 days, so you should make sure to be informed and comfortable as to how your money will be held. The IRS makes it very clear that the taxpayer cannot have receipt of funds, actual OR constructive, to qualify for tax deferral under §1031, so transparency is key with your 1031 Exchange. Here are some factors to consider and discuss in the planning stages of the transaction.

• Will my exchange have its own account or will my funds be mingled with other exchanges?
• Is the account a demand account with sufficient liquidity to fund quick escrow deposits for my replacement properties?
• How many signers from the intermediary are required to withdraw funds from my exchange account?
• Will the bank have a copy of my exchange agreement and authorized signature?
• At the end of the exchange can I receive a statement from the bank itemizing all account activity?