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STEP 1...
Find an experienced professional QUALIFIED INTERMEDIARY to assist you with the exchange as early in the sale process as possible. Key points to consider in selecting a Qualified Intermediary are: the knowledgeable and experienced staff; the local assistance for your real estate agent, CPA and attorney; and of especially critical importance: the safety of your funds while held by the Qualified Intermediary. At a minimum, you should require the Qualified Intermediary to provide fidelity bond insurance coverage. Investment Property Exchange Services, Inc. has a written guarantee and a $100 million fidelity bond to secure the exchange funds.
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Fred Hanselmann
Rocky Mountain Photography ©
hanselmannphotography.com |
STEP 2...
Instruct your real estate agent to include an Exchange Cooperation Clause? as an addendum to the purchase and sale agreement on the relinquished property (the property the Exchanger is selling to the buyer).
An example Exchange Cooperation Clause is:
Buyer hereby acknowledges that it is the intent of the Seller to effect an IRC 1031 tax deferred exchange which will not delay the closing or cause additional expense to the Buyer. The Sellers rights under this agreement may be assigned to Investment Property Exchange Services, Inc., a Qualified Intermediary, for the purpose of completing such an exchange. Buyer agrees to cooperate with the Seller and Investment Property Exchange Services, Inc. in a manner necessary to complete the exchange.
STEP 3...
Contact your Qualified Intermediary as soon as possible after escrow is opened or after entering into the purchase and sale agreement and advise them of your intent to do an exchange well in advance of the closing date. The Qualified Intermediary will draft the appropriate Exchange Agreement, Assignments and Exchange Closing Instructions that must be executed prior to closing on the property being sold.
STEP 4...
Start searching for acceptable replacement property immediately to insure that you can meet the strict time frame for the 45-day Identification Period.
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Jeffery James McClintock
Real Estate Advsior-Broker |
RealEstateColorado.Net, Inc. is available to assist Exchangers and their advisors with their exchange strategies. The Exchanger is always advised to discuss the intended exchange with their legal or tax advisor. RealEstateColorado.Net, Inc or it's Brokers cannot provide advice regarding specific tax consequences. Investors considering an IRC 1031 tax deferred exchange should seek the counsel of their accountant and attorney to obtain professional and legal advice.
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