1031 Exchange Success: Why It’s Not Just About Your Real Estate Attorney

A skilled real estate attorney plays an important role in property purchases and sales, ensuring smooth title transfer and contract review. However, when it comes to a 1031 exchange, a specialized facilitator known as a Qualified Intermediary (QI) is vital. Here’s the breakdown and why this matters to your tax-deferral goals.

What Does a Qualified Intermediary Do?

1. Secures Exchange Funds: A QI holds the sale proceeds from your relinquished property in a secure account, preventing you from directly receiving funds that would invalidate the exchange.
2. Follows the Rules: QIs specialize in the unique and often complex regulatory requirements of 1031 exchanges. They handle paperwork, coordinate timing, and mitigate potential IRS scrutiny.
3. Protects Your Tax Deferral: Mishandling exchange funds or violating procedural rules can result in losing your tax deferral advantages. QIs act as safeguards.

Your Real Estate Attorney Isn’t Automatically a QI

While real estate attorneys understand legal contracts, they might not have the depth of 1031 tax knowledge to fulfill the QI role. Potential conflicts of interest may also exist. Here’s how these professionals often collaborate:

• Documentation Review: Your attorney assists with purchase and sale agreements, ensuring they include language consistent with your 1031 exchange plan.
• QI Coordination: They may communicate with your chosen QI to confirm contract information and exchange timelines.
• Title Issues: Your attorney likely works with the title company on clearing title matters affecting the transfer. This remains valuable when doing a 1031 exchange.

The Right Expertise for a Successful Exchange

Think of your 1031 Exchange as a team effort:

• Real Estate Attorney = Strong contract knowledge and legal oversight
• Qualified Intermediary = Tax-law compliance and secure fund handling
• You = Clear vision and coordination of those specialists to meet your goals

Choosing Your Qualified Intermediary – Experience Matters

At WealthBuilder 1031, we focus exclusively on executing sound 1031 exchanges for our clients. Our specialized knowledge of tax code helps safeguard your deferral benefits. If you’d like to learn more, contact us at (888) 508-1901 for a consultation where we can discuss your transaction needs.