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Fiduciary 1031 Exchange Process

1031 Exchange Process

  1. Exchanger sells investment property, known as the relinquished property.
  2. Proceeds are escrowed with a Qualified Intermediary (QI) at close of sale.
  3. Exchanger identifies replacement property(ies) within 45 days of sale and notifies QI.
    • Identification of Replacement Property:
      • 3 Property Rule – may identify up to 3 properties without regard to fair market value.
      • 200% Rule – may identify more than 3 properties, if the total fair market value of all properties identified does not exceed 200% of the total fair market value of all Relinquished Properties.
      • 95% Rule – any number of properties may be identified as long as the Replacement Properties acquired amount to at least 95% of the fair market value of all identified properties.
  4. The QI transfers the funds for purchase of replacement property(ies). Exchanger must close on replacement investment property(ies) within 180 days of the closing date of the relinquished property.

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