1031 Exchange: Exchanger Checklist
This checklist is intended to provide a brief overview of the steps involved in an IRS code 1031 tax deferred exchange.
___ Meet & Review
Review your entire transaction with a tax and/or legal advisor. As a Qualified Intermediary, MEGA 1031 cannot provide tax or legal advice.
___ Critical Questions
Does the property qualify for an exchange? Does a 1031 exchange make financial sense for me?
Our exchange calculator will help you measure the advantages of doing an exchange with regards to your particular situation.
___ Sale Contract
Enter into an “assignable” contract to sell your relinquished property. Execute contract with the exchanger’s name and/or assigns.
___ Notify MEGA 1031 of Your Sale
When your property goes under contact, MEGA 1031 to initiate the exchange transaction.
Call our National Headquarters (866.881.1031) or go to www.MEGA1031.com and click on “How to Get Started”.
___ Exchange Set-Up
MEGA 1031 will prepare the exchange documents for the relinquished property sale.
- The original documents will be forwarded to the closing officer who will coordinate the signatures.
- Copies of documents are forwarded to the exchanger.
___ Relinquished Property Closes
MEGA 1031 is assigned to the transaction as the seller and the sale then closes.
- Pursuant to the assignment agreement and exchange documents, MEGA 1031 instructs the closing officer to directly deed the relinquished property to the buyer.
- Exchange proceeds are transferred directly to MEGA 1031 via wire transfer.
___ Begin Identification Period
Both the 45-day identification period and 180-day exchange period begin on close of the sale of the relinquished property.
Although it is the sole responsibility of the exchanger to meet all identification rules, MEGA 1031 will forward confirmation when the exchange proceeds are received. Further we will notify you when the 45-day identification document is received. The 180 day period (or the date the tax return is due, whichever is earlier) is the period during which your replacement property must close.
Most 1031 exchanges fail because suitable replacement property is not identified in the 45 days allowed
___ Replacement Property Identified
Exchanger properly identifies replacement property by midnight of the 45th day.
- Identification Document: Specific written identification document, signed by the taxpayer, is forwarded to MEGA 1031. Written identification can also be made to a party involved in the exchange transaction who is not a disqualified person.
- Purchase Contract: Enter into an “assignable” contract to purchase replacement with a realtor. After signing the contract, contact MEGA1031 at 866.881.1031.
___ Exchange Paperwork Drawn
MEGA 1031 will prepare the exchange documents for purchase.
- The original documents will be forwarded to the closing officer who will coordinate the signatures.
- Copies of documents are forwarded to the exchanger.
___ Replacement Property Closes
MEGA 1031 is assigned into the transaction and purchase closes.
- Pursuant to the assignment agreement and exchange documents, MEGA 1031 instructs the closing officer to directly deed the replacement property from the seller.
- MEGA 1031 wire transfers exchange proceeds to the closing officer
___ Completion
If all exchange funds are used to acquire the replacement property or properties, and all the exchange requirements are met, the exchange is complete.
Remember it is better to pay taxes than to make a bad investment.
Investors should always seek the advice of their tax and/or legal advisors regarding their specific situation.
