A Quick Reference Guide to
1031 Exchanges
Making the most of your 1031 Exchange transaction.
Exeter 1031 Exchange
Services, LLC
404 Camino del Rio South, Ste 600
San Diego, CA 92108
(619) 239-3091
This Quick Reference Guide to
1031 Exchanges is courtesy of:
© Copyright 2006 – 2019 by Exeter 1031 Exchange Services, LLC. All Rights Reserved.
Table of Contents
1031 Exchange Benets ................................................ 4
1031 Echange Structures .............................................. 5
1031 Exchange Qualications ...................................... 6
1031 Exchange Reinvestment Requirement ............... 7
1031 Exchange Deadlines ............................................ 8
1031 Exchange Identication Rules ............................. 8
Choosing a Reliable Qualied Intermediary ............... 9
1031 Exchange Benets
The sale of real estate can result in Federal and state taxes
as high as 40% of your taxable gain. It’s much more difcult
to reinvest in replacement property when you must pay
this much in taxes. That’s why 1031 Exchanges are such a
popular tax deferral strategy.
A 1031 Exchange allows you to indenitely defer the
payment of your Federal and state capital gain and depre-
ciation recapture taxes, and avoid the Medicare Surcharge
(Obamacare tax), when you sell real estate and then reinvest
in replacement property. You keep all your money invested
and working for you instead of paying taxes.
You should always consult with your legal, tax and nancial
advisors to ensure the 1031 Exchange strategy is right for
1031 Exchange Structures
Once you have met with your advisors, you need to decide
which 1031 Exchange structure is most appropriate for
you. Here is a quick summary of the various 1031 Exchange
structures available.
Simultaneous or Concurrent 1031 Exchange Your relin-
quished property and replacement property transactions
both close at the exact same time.
Forward or Delayed 1031 Exchange The sale of your re-
linquished property closes rst, and then the acquisition of
your replacement property closes later within the prescribed
Reverse 1031 Exchange The purchase of your replace-
ment property closes rst and is acquired and held or
“parked” by your Qualied Intermediary. The sale of your
relinquished property closes later within the prescribed
Build-to-Suit (Improvement or Construction) 1031 Exchange
Your 1031 Exchange proceeds from the sale of your relin-
quished property are used to acquire your replacement
property, then improve the replacement property through
the 1031 Exchange process.
Foreign Property Exchange Foreign property can be sold
and exchanged for other foreign property.
1031 Exchange Qualications
You and your advisors need to ensure that your 1031
Exchange is properly structured and in compliance with the
applicable tax codes, regulations and rulings. The following
summarizes the requirements for a successful 1031 Ex-
Qualied Intermediary You must retain the services of a
Qualied Intermediary to administer your 1031 Exchange
before you close on the sale or purchase of any property.
Qualied Use Property You must have the intent to hold
your relinquished property and your replacement property
for rental, investment or business use to qualify for 1031
Exchange treatment. Properties held for personal use or for
sale (rehabs/ips) do not qualify for a 1031 Exchange.
Like-Kind Property The relinquished property and the
replacement property in your 1031 Exchange must be
“like-kind property”. This simply means you are selling real
estate and must buy real estate. ANY kind of real estate is
like-kind to ANY other kind of real estate if both properties
are held for rental, investment or business use. Like-kind
does NOT mean condo for condo or apartment for apart-
1031 Exchange Reinvestment Requirement
Trade Equal or Up in Value You must trade equal or up in
value to defer all your taxes. The total purchase price of
your replacement properties must equal or exceed the net
sale price of your relinquished properties. You can trade
down in value, but you will pay some taxes.
Reinvest 100% of Net Proceeds All your equity from the
sale of your relinquished property must be reinvested in one
or more replacement properties. You can pull cash out, but
it will be taxable.
Replace Debt The new loan amount on your replacement
property will be the difference between the total purchase
price less the net proceeds reinvested unless you put cash
into the transaction. Debt can be replaced with new cash.
1031 Exchange Deadlines
You have exactly 45 calendar days after closing on your rst
relinquished property to identify your replacement prop-
erties, and exactly 180 calendar days after closing on your
rst relinquished property to complete your 1031 Exchange.
The 180 calendar days includes the 45 days to identify your
replacement properties.
1031 Exchange Identication Rules
You must comply with one of the following identication
Three Property Rule You can identify up to three (3) replace-
ment properties. The limit is on the number of properties
identied and not the value of properties identied.
200% Rule You can identify as many replacement proper-
ties as you like as long as the total value of the identied
properties does not exceed 200% of the gross sale price
of the relinquished property. The limit is on the value of
the properties identied and not the number of properties
95% Exception You may identify as many replacement
properties as you want, but you must acquire and close on
95% of the value identied.
Choosing a Reliable Qualied Intermediary
The Qualied Intermediary plays a critical role in your
1031 Exchange, especially when it comes to holding and
safeguarding your 1031 Exchange funds. The safety of your
funds should be the most important part of your due dili-
gence. It is crucial that you thoroughly evaluate prospective
Qualied Intermediaries. We recommend that you consider
the following criteria prior to selecting your Qualied Inter-
Licensed, Regulated and Audited Qualied Intermediaries
should be licensed, regulated, and audited by a regulatory
body, such as the division of banking, to ensure they are
operating in a safe, sound and secure manner. Exeter Trust
Company is licensed, regulated, and audited by the Wyo-
ming Division of Banking.
Qualied Trust Accounts Your 1031 Exchange funds should
always be held in separate, segregated Qualied Trust
Accounts so funds are clearly marked as client trust funds
and not corporate funds. Exeter 1031 will deposit, hold and
safeguard your funds in separate, segregated, dual-signa-
ture Qualied Trust Accounts at Exeter Trust Company.
Bonding, Insurance and Equity Capital Qualied Interme-
diaries should have signicant delity bond coverage, errors
and omissions insurance and equity capital to protect your
1031 Exchange funds. The Exeter Group of Companies
maintains signicant delity bond coverage, errors and
omissions insurance and equity capital to protect clients’
1031 Exchange funds, as required by the Wyoming Division
of Banking.
Technical Expertise and Experience Qualied Interme-
diaries should provide advisory and consultative services
and not just be a “processor.” You and your advisors need
a Qualied Intermediary that has decades of experience
and expertise in the administration and structuring of 1031
Exchange transactions. Exeter 1031 Exchange Services,
LLC has decades of experience and will work with you and
your advisors to help answer questions and discuss poten-
tial strategies.
Independent; No Conicts-of-Interest Choose an indepen-
dent, institutional Qualied Intermediary with no conicts
of interest. Exeter 1031 Exchange Services, LLC is not
associated with any title insurance company, escrow com-
pany, settlement services company, or investment products
company and is only focused on your 1031 Exchange and
nothing more.
Please feel free to call Exeter 1031 Exchange Services, LLC
with any questions you might have. We are always available
to assist you 24/7.
A Better 1031 Exchange Experience
Work with a company that is licensed, regulated
and audited by the Wyoming Division of Banking,
and can collaborate with investors’ legal and
tax advisors. A rm with high levels of delity
bonding, E&O insurance and equity capital.
We deliver a better 1031 Exchange experience.
Qualied Trust Accounts administered by Exeter Trust Company.
The Exeter Group of Companies
Exeter 1031 Exchange Services, LLC
1031 Exchange Services Group
Qualied Intermediary for 1031 Exchanges
Exeter Asset Services Corporation
1031 Exchange Services Group
Exchange Accommodation Titleholder for Parking Arrangements
Exeter Trust Company, Cheyenne, Wyoming
1031 Exchange Services Group
Trustee for Qualied Trust Accounts
Retirement Services Group
Custodian for Self-Directed IRAs
Custody Services Group
Custodian for Non-Retirement Account Assets
Escrow Agent for Specialized Holding Escrows
Trust Services Group
Trustee for Title Holding Trusts (Land Trusts)