1031 Accommodators, LLC

Florida-Based Company Providing Nationwide Comprehensive 
Intermediary Services for Tax-Deferred Real Estate Investments
The Delayed Exchange Process
IRC § 1031 Reverse Exchange Up Date (HERE)
 
In a delayed exchange, the replacement property must be identified within 45 days of closing the relinquished property, and closed within a total of 180 days.

All funds are held in the intermediary's interest bearing trust account. Funds are dispersed as required to close all replacement properties.

Let's Get Started

The exchanger enters into a purchase and sales contract for the property to be relinquished. Once a copy of the contract is received by Freec, the Exchange Agreement, Assignment Agreement, and Notification of Assignment for the relinquished property are prepared by Freec. In most cases we can prepare the documents and transmit them anywhere in the United States.

Step by Step
Step #1     Relinquished Property

Contact Florida Real Estate Exchange Connection (Freec) immediately upon deciding to perform an exchange. Upon closing, the exchanged property transfers to Freec, Inc. and then simultaneously transfers to the buyer. Freec works closely with all parties to assure a harmonious settlement. 

 
The first phase of the exchange is complete.

Step #2     Identification of Replacement Property

Replacement property must be identified within 45 days from the closing of the relinquished property. Freec provides the documentation to comply with Treasury Regulations.

Step #3     Replacement Property

Once suitable replacement property is identified, the exchanger should enter into a contract to purchase and immediately notify Freec. The acquisition of replacement property must be completed within 180 days of the closing of the relinquished property. 

Instructions to complete the exchange will be delivered to the closing officer, and all parties for review and signature. The Exchange is completed when the property is purchased by Freec and simultaneously transferred to the exchanger. 

 

"A" represents contracts between exchanger, Freec and the buyer of the relinquished property. 

"B" represents contracts related to the replacement property.

IRC § 1031 Reverse Exchange Up Date

Good news on “Reverse” 1031 Exchanges - now you can help your customers even more as you steer them into a “Safe Harbor”.
Effective Sept. 15 2000
Up to now, most reverse 1031 exchanges have been viewed as a problem because of the lack of a standard procedure and the high probability of audit. The IRS recently issued new provisions making it easier to take advantage of “reverse” tax deferred exchanges.  Revenue procedure 2000-37, effective September 15, 2000,  provides a framework that establishes a “safe harbor” which the IRS will not challenge provided the steps are followed.

Just suppose you find that perfect investment property for your client but they have not yet contracted to sell their relinquished property.  As a Realtor, you know that that special property will be off the market soon.  No problem, suggest a reverse 1031 exchange and involve a “qualified exchange accommodator ”.  NOTE: For the purpose of clarifying the third party role in “reverse” exchanges the term “accommodator” is substituted for intermediary.

The process is very similar to the standard tax deferred exchange.  It is essentially a mirror image placing the acquisition of replacement property before the sale of relinquished property. 

The identification time line is the same 45 days.  The clock starts when the replacement property is transferred to the accommodation title holder (formerly intermediary).  The relinquished property sale must be closed within the remainder of the 180 day period.
 
 

Florida Real Estate Exchange Connection

What’s New?

1.  It must be the taxpayer’s  “bona fide intent” to transfer the property to the accommodator when the replacement property is purchased .

2.  The accommodator must hold legal title or similar ownership to the property. 

3.  The taxpayer may lease the replacement property from the accommodator and enjoy most of the benefits of ownership.

4.  And the taxpayer must enter into a written “qualified exchange accommodation agreement” (QEAA) within five days of the transfer.

5.  The taxpayer may loan funds or guarantee debt incurred by the accommodator to acquire the replacement property.

What’s Next - Amendments?

2000-37 falls short of addressing some major concerns where “Self Traded Exchanges” (taxpayer building on his own lot) are concerned.   Often 180 days in inadequate time period to complete construction.  We and the Big Six Accounting Firms have suggested the following to the IRS.

1. Qualified accommodator be allowed to hold property in “safe harbor” for two years to allow for adequate construction time. 

2.  Extensions be granted in two year increments on a case-by-case basis where unforeseen events or circumstances adversely affect construction. e.g., (hurricane / fire).

We’ll let you know if, and when the IRS adopts these revisions.

 
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