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Transcript

Wondering how an exchange works and justice 2 minutes. I'll tell you what a qualified intermediary is and why nearly all exchanges need one. As we discussed in the last episode, a Section 1031 exchange is where a taxpayer relinquishes real estate held for investment and uses those funds to acquire replacement property. Many times someone would be at their closing and indicate they want to do an exchange, or worse, they decide upon an exchange after the closing. If it's after, it's too late, and it may be too late if you don't have it set up for the closing. Qualified intermediary as the person who holds the money from the closing of your relinquished property and the money is received at closing at 1031 exchange will not apply, so it is critical to locate a qualified intermediary beforehand. Qualified intermediaries are virtually any person or business not affiliated with the transaction or the taxpayer. Once the qualified intermediary is located and exchange agreement is prepared that governs the relationship. Includes how the money will be distributed. After the first closing, the exchanger has 45 days to identify other like kind property and then 180 days to close on that property. These dates are critical and without complying with them the exchange fails. You can identify more than one replacement property, up to three without considering value and more than three, but only by complying with certain complicated rules by engaging a qualified intermediary. Before closing and complying with the timelines and exchange can be successful, and that's the more you know.