What is a form 1031?

Posted on by Muna Meyer

What is a form 1031?

If you own investment property and are thinking about selling it and buying another property, you should know about the 1031 tax-deferred exchange. This is a procedure that allows the owner of investment property to sell it and buy like-kind property while deferring capital gains tax.

How do you do a 1031?

How to do a 1031 exchange

  1. Step 1: Identify the property you want to sell.
  2. Step 2: Identify the property you want to buy.
  3. Step 3: Choose a qualified intermediary.
  4. Step 4: Decide how much of the sale proceeds will go toward the new property.
  5. Step 5: Keep an eye on the calendar.
  6. Step 6: Be careful about where the money is.

What is a 1031 accommodator?

A Qualified Intermediary, also known as a 1031 exchange accommodator, is an independent person, company, or entity that enters into a written agreement with the exchanger to facilitate the transfer of proceeds.

How do I open a 1031 account?

How to Open a 1031 Exchange

  1. Online – Go to the Asset Preservation, Inc. (
  2. Email or Fax – Use the attached Order Form and email to [email protected] or fax to (916) 749-1270.
  3. Call Toll-Free – Call (800) 282-1031 with the following information, and we will set up the §1031 Exchange with you.

HOW DOES A QI make money?

Interest income: How a qualified intermediary makes most of their money. When you complete a 1031 exchange, the proceeds from the sale of the original property are held by the QI until you buy the replacement property. In the meantime, the funds are generating interest in a money market or other deposit account.

What is the 121 exclusion?

IRC section 121 allows a taxpayer to exclude up to $250,000 ($500,000 for certain taxpayers who file a joint return) of the gain from the sale (or exchange) of property owned and used as a principal residence for at least two of the five years before the sale.

Does CA recognize 1031 exchange?

California recognizes 1031 Exchanges which allows an investor to defer capital gains taxes as long as you are purchasing another “like-kind” property to replace the one you are selling. California does recognize it if you purchase your upleg in another state, but beware of the above “Clawback” rule.