Our Role in the 1031 Exchange Process
1031 Exchanges present a tremendous opportunity to reposition investment real estate and re-align properties with an investor’s goals and objectives – all without paying tax. However, navigating the 1031 Exchange process can be complex and is full of opportunities to potentially trip an investor up, resulting in either a failed 1031 Exchange or the purchase of replacement properties that are not suitable for the investor.
At Real Estate Transition Solutions, we work with real estate investors to ensure they adhere to all the requirements of a 1031 Exchange, educating investors on available replacement property options, presenting strategies that may not have been known by the investor, and assisting in the acquisition of properties that are in line with their objectives. For Delaware Statutory Trusts and Tenant-in-Common 1031 Exchange replacement properties, we perform rigorous due diligence on both the property’s sponsor and the underlying property.
Everything we do centers around the client’s objectives and education. When we work with a client on an exchange, we regularly circle back to what the objectives are and whether the planned transaction will best position the client to accomplish their objectives. Education is key. We make sure our clients know and understand how to do a 1031 exchange, what their replacement property options are, what the pros and cons are of each option, and opportunities and costs of various options (1031 Exchange calculation).
We also make sure they are aware of which strategies can be implemented, and how different replacement properties can be combined to create the right mix for an individual client. Focusing on clients’ objectives and education allows us to best serve into the lives of our clients – working diligently to help move them toward accomplishing their financial and lifestyle goals.
Following the exchange, we will communicate with the replacement property sponsor on behalf of our client to ensure all distributions and tax reporting information are both correctly received and understood by the client and their tax preparer. Down the road, when the replacement property is to be sold, we will work with clients to re-evaluate their objectives and help determine suitable replacement properties, should the client wish to defer tax again with a 1031 exchange. For those who choose to continue to exchange, we build a lasting relationship for decades to come.