It is common for investors who want to get the most out of their real estate assets to use a 1031 exchange, in which they reinvest the profits of the sale of one property in another property of a "like-kind" in order not to pay capital gains taxes on the gains currently made. Because of the complexity of exchanges conducted following IRC Section 1031, this is easier said than done.

There is no room for error, and any blunders can cost money. Working with a full-service 1031 exchange provider offers this benefit. In addition, given their size, they are often less expensive than hiring an attorney hourly.

What is a 1031 Exchange?

Typically, a real estate investor trades one property for another in a 1031 exchange. Section 1031 of the Internal Revenue Code governs the transaction since the method allows investors to delay capital gains taxes provided certain conditions are satisfied.

It is essential that the seller of property finds and acquire an alternative within 45 days after the first sale and that the transaction is completed within 180 days. To avoid capital gains taxes, investors might swap property for another equal value instead of selling it.

How Much Is a 1031 Exchange?

Due to the intricacy of the procedure, the costs for 1031 exchange services are usually acceptable in terms of cost. A wide range of fees depends on the type of property, its value, and its location. If you're doing a simple delayed exchange, the charge might range from $600 to $1,000 for either side.

A $350 fee may be added to each additional property involved in the transaction if more than one property is involved. Instead of charging a flat cost, some firms charge a fee depending on a customer's specific needs. Reverse and improvement exchanges, for example, have higher fees than simple exchanges.

How Many Types of 1031 Exchanges Are There?

In the vast majority of delayed 1031 exchanges, selling one or more properties is all that is required. As soon as the sale of a property is finalized, the profits are held by a certified intermediary. The property or methods used to complete the transaction vary for specific trades. The purchase of raw land to construct a structure is an example of a build-to-suit trade.

The Best 1031 Exchange Companies in 2022

IPX1031

Established in 1988, IPX1031 was a pioneering certified intermediary. It has grown to include all major cities around the country, and they now handle tens of thousands of 1031 exchanges annually, which is why they are the finest overall. Title insurance giant Fidelity National is backing IPX1031, giving it the financial strength it needs to weather the storms of a downturn.

As a result, IPX1031's clients may be sure that they are working with a company that has its own national office dedicated solely to the more difficult improvement and reverse exchange operations. The company has 35 locations around the United States, as well as. Regional offices are staffed by competent mediators who are well-versed in state and local concerns. IPX1031 is a subsidiary of a big title business. Thus it may also provide title and settlement services.

First American Exchange

Regarding 1031 exchange, First American Exchange is one of the more established organizations with an excellent track record. Additionally, it provides the most incredible ease and efficiency as well as dependability, security, and financial stability at highly cheap pricing, making it our pick as the top 1031 exchange provider.

Since its founding in 1902, its parent company, First American Insurance Company, has provided title insurance and settlement services to countless satisfied customers across North America. First American is a nationwide company with decades of expertise in completing trades throughout the country.

First American allows for both delayed and reversal trades. Because they have 1031 exchange specialists accessible in every state, they are well-versed in the laws that apply to each state's exchanges. To help investors with legal and tax issues, they have a complete staff of attorneys and accountants. First American may provide title insurance and comprehensive settlement services for real estate and mortgage firms in addition to its exchange services.

Exeter 1031 Exchange Services

It was created in 2004 by long-time industry specialists with a good deal of experience dealing with complex 1031 exchanges. As a full-service currency exchange, it has built a reputation for managing complex transactions swiftly and effectively. It stands by its services with a money-back guarantee. Regarding complicated swaps, Exeter is the most acceptable 1031 exchange business to work with.

Exeter created several subsidiary firms to assist its increasingly complex operations in giving more efficiency and security to its clients' funds. Client monies are held in separate, dual-signature Qualified Trust Accounts at the Exeter Trust Company, which is governed and audited by the Wyoming Division of Banking. Investors can have their real estate assets kept in a self-directed IRA through the trust firm.