How to Build a Winning 1031 Exchange Team

A successful 1031 exchange requires more than just a willing buyer and seller. It takes a skilled 1031 exchange team of experienced professionals who understand the rules, deadlines, and financial implications. When realtors help clients assemble the right team, deals go smoothly, deadlines are met, and taxes are deferred without a hitch.

This article explains the key players in a 1031 exchange, how to coordinate their efforts, and why realtors are in the perfect position to bring the 1031 exchange team all together.

Why a Strong 1031 Exchange Team Matters

1031 exchanges involve strict IRS deadlines, legal paperwork, tax considerations, and real estate transactions. No single professional handles everything. A well-coordinated team ensures nothing falls through the cracks in the 1031 exchange process.

Missed deadlines, wrong paperwork, or misunderstood tax rules can disqualify the exchange, leaving the investor with a big tax bill. The right team prevents these costly mistakes.

Key Team Members

• Realtor: Guides the process, educates clients, and coordinates the team.
• Qualified Intermediary (QI): Holds the funds, prepares documentation, and ensures IRS compliance.
• Tax Advisor or CPA: Analyzes tax implications, helps with reporting, and plans future exchanges.
• Attorney: Reviews contracts, ensures legal compliance, and handles title issues.
• Lender: Provides financing for replacement properties when needed.
• Property Manager or DST Sponsor: Manages properties or oversees passive investments.

Realtor’s Role as Team Leader

The realtor often acts as the quarterback of the 1031 exchange team. You connect clients with the right professionals, keep everyone on schedule, and explain the process in simple terms.

Realtors who understand 1031 exchanges become invaluable resources for investors. You’re not just selling property – you’re providing a strategic, tax-smart solution which a 1031 exchange team can help facilitate.

Case Study: Building the Perfect Team

Maria wanted to sell a commercial building and buy several rental properties using a 1031 exchange. Her realtor introduced her to a QI, tax advisor, and lender experienced in exchanges. Together, they coordinated timelines, financing, and paperwork to ensure the 1031 exchange team operated smoothly. Maria closed on all properties within 180 days, deferred hundreds of thousands in taxes, and expanded her portfolio smoothly.

Step-by-Step Guide to Building the Team

• Step 1: Start with a Qualified Intermediary – essential for compliance.
• Step 2: Bring in a tax advisor early to plan strategies.
• Step 3: Add a real estate attorney for legal and title issues.
• Step 4: Coordinate with lenders if financing is needed.
• Step 5: Consider property managers or DST sponsors for long-term management.
• Step 6: Use the realtor’s role to keep communication clear and deadlines visible.

Frequently Asked Questions

• Do I need a QI for every 1031 exchange? (Yes, it’s required by law.)
• Can my CPA act as my QI? (No, they’re considered a disqualified party.)
• What if I want to invest in a DST? (Work with sponsors who coordinate with your QI.)
• When should I contact the team members? (Before selling your property, not after.)

Pro Tips for Realtors

• Build relationships with QIs, tax advisors, and attorneys in advance.
• Create a checklist of contacts for clients considering a 1031 exchange.
• Offer educational seminars or webinars on 1031 exchanges with your team.
• Stay in touch after the transaction for referrals and repeat business.

If you are ready to get started on your next 1031 exchange, contact us at WealthBuilder 1031. For more information, check out these other articles:

• Navigating Your 1031 Exchange: How to Collaborate with Your Realtor for Success
• Navigating the 1031 Exchange: Title Company, Real Estate Attorney, and QI Roles
• The ABC’s of 1031 Exchanges: A Simple Guide to Tax-Deferred Real Estate Investing
• Crossing State Lines: Your Guide to Multi-State 1031 Exchanges
• Why Every Realtor Should Master 1031 Exchanges