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Exchange ABC's

Creating An Exchange

Frequently Asked Questions

What Qualifies?

Exchange Calculator

Capital Gains

IRC 1031

Taxable Boot

Exchange Process

Role of Facilitator

Choosing a Facilitator

 


Creating an exchange of any kind is a simple procedure in which EQUITY ADVANTAGE, INCORPORATED prepares all of the documents and instructions needed by all parties and oversees the process. All parties to the transaction receive complete sets of copies of the exchange agreement, novation agreement, and escrow instructions to review by counsel, if desired.

Your part in the exchange is to enter into the sale and purchase transactions for the properties you wish to dispose of and acquire just as you would for a simple sale and purchase. ADVANTAGE will create the exchange for you. You should notice no difference between the familiar sale transaction and an exchange performed by ADVANTAGE.

Relinquished Property

Contact ADVANTAGE immediately upon deciding to create a delayed exchange. If you have a real estate agent, attorney, accountant and escrow office notify them as well. ADVANTAGE will work closely with your advisers. The delayed exchange documents may be prepared and signed immediately or they can be made available for signing at close of escrow. ADVANTAGE will ask for your name and address, the name and address of your agent, if any, and the name and address of the escrow holder you will use. This is all that is needed to prepare the closing instructions and documentation. During the closing, ADVANTAGE will be available to assist you and your agent with answers to any questions you might have and to help the escrow holder prepare documents, if necessary. Cash proceeds from the sale are sent to special business accounts maintained at the most secure banks and depositories which can be found in preparation for the completion of the exchange. At this point, the first part of the exchange is completed.

Identifying a Property

Once the relinquished property has been closed, you must fill out the identification list that will be provided for you. To identify a property you must give a legal description or property address of the target property. You can identify multiple properties by selecting one of the following:

  1. Three properties of any value.

  2. More than three properties as long as their aggregate value does not exceed 200% of the market value of the initial exchange property.

  3. If you wish to target more than 3 properties and the aggregate value exceeds 200% of the initial exchange property, then you must acquire 95% of the market value of the properties identified.

Replacement Property

Locate a suitable exchange property, enter into an agreement to purchase and notify ADVANTAGE. Include a provision in the purchase agreement requiring the seller to assist in completing your exchange. Special instructions are delivered by ADVANTAGE and your agent to the escrow holder to complete the exchange. The property is purchased by ADVANTAGE and transferred to you. The exchange is complete.

Very Easy

Creating the delayed exchange is a simple process which will be coordinated by ADVANTAGE and your real estate agent. Although exchanging is an old, established procedure, many variations exist. Any of these techniques can be used to create opportunities or to solve existing problems.