A wholly-owned subsidiary of DBL Law
Who we are:
ExcelExchanges is a 1031 exchange facilitator committed to providing professional client service, efficiency, value, reliability and peace of mind. Our team of tax attorneys and professionals structure, coordinate and document 1031 exchanges for clients across the country. Our services include:
- Consultations with our tax attorneys to determine how to maximize the tax benefits associated with 1031 exchanges;
- Preparation of the contracts and instruments necessary to complete your 1031 exchange in a manner that complies with the Internal Revenue Code;
- Reporting the 1031 exchange on your tax return;
- Drafting Tax Opinion Letters; and
- Coordinating and communicating with you, your counterparties, and the myriad of other parties involved with your 1031 exchange transaction.
What is a 1031 exchange?
Real property that is sold at a gain is generally subject to taxation. To defer the tax, real estate investors can utilize Section 1031 of the Internal Revenue Code which provides that no gain or loss is recognized if the investor invests the sales proceeds into different real property and otherwise complies with Section 1031.
Importantly, the law prohibits the investor from receiving “actual or constructive receipt” of the sales proceeds. Due to this prohibition, almost every 1031 exchange involves the use of a Qualified Intermediary (i.e. ExcelExchanges).
How does it work?
The following illustrates the timeline and mechanics of a typical 1031 exchange:
- John Smith enters into a contract to sell real property to an unrelated party.
- John contacts ExcelExchanges and requests that we serve as “Qualified Intermediary”
- ExcelExchanges drafts the necessary 1031 paper work, including an Exchange Agreement whereby we agree to the terms and conditions applicable to John’s 1031 exchange.
- In accordance with the Exchange Agreement, John assigns the purchase contract to ExcelExchanges for purposes of avoiding “actual or constructive receipt” of the sales proceeds that he would otherwise be entitled to.
- John closes on the sale, the sales proceeds are deposited into a “Qualified Escrow Account” in the name of ExcelExchanges for John’s exclusive benefit.
- Within 45 days of the sale, John identifies one or more replacement properties to purchase.
- Within 180 days of the sale, John purchases one or more replacement properties using the proceeds held by ExcelExchanges. John utilizes all of the sales proceeds (and interest accrued in the Escrow Account) for the purchase of the replacement property. Obviously, if John was unable to utilize all the proceeds, the remaining balance of the funds would be wired to him upon completion of the exchange.
- John reports the exchange on IRS Form 8824 so as to properly claim deferral of the gain that would otherwise be reported on his tax return.