1031 Exchange 


 
 

What is an Exchange?

A tax deferred exchange is a method by which a taxpayer trades property, held for investment or business purposes, for replacement property resulting in a deferral of tax on the transaction. When you sell a business or investment property and you have a gain, you generally have to pay tax on that gain. This capital gains tax varies depending upon your particular situation.

1031 Exchanges are often referred to as “tax free exchanges” as the transaction itself is not taxed. Section 1031 of the Internal Revenue Code provides an exemption from current recognition of realized gain, providing that the requirements of the IRC are carefully met. Using our service will allow you to use more of your equity to acquire the property you desire by deferring capital gains tax.

Washington 1031 Exchanges

"Washington State Law, RCW 19.310.040, requires an exchange facilitator to either maintain a fidelity bond in an amount of not less than one million dollars that protects clients against losses caused by criminal acts of the exchange facilitator, or to hold all client funds in a qualified escrow account or qualified trust that requires your consent for withdrawals. All exchange funds must be deposited in a separately identified account using your taxpayer identification number. You must receive written notification of how your exchange funds have been deposited. Your exchange facilitator is required to provide you with written directions of how to independently verify the deposit of the exchange funds. Exchange facilitation services are not regulated by any agency of the state of Washington or of the United States government. It is your responsibility to determine that your exchange funds will be held in a safe manner."  If recommending other products or services, the exchange facilitator must disclose to the client that the exchange facilitator may receive a financial benefit, such as a commission or referral fee, as a result of such recommendation. The exchange facilitator must not recommend or suggest to a client the use of services of another organization or business entity in which the exchange facilitator has a direct or indirect interest without full disclosure of such interest at the time of recommendation or suggestion."

      Preserve 1031 Exchanges

 

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