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Tom’s Tip of the Month – September/October 2011

ThomasMoore1031ExchangeTipsKnow when you can receive the money in an exchange. Through the years this subject has been a bone of contention for all involved in the 1031 Exchange world.

In a nutshell it is only possible for an Exchangor to receive exchange proceeds when he has received all property he has the right to receive. This means it is possible to receive the exchange funds after day 45 if nothing has been identified or after the 180th day if property has been identified.

When identifying multiple replacement properties it is important to clarify whether you are identifying with the intention of giving alternate properties or you intend to acquire multiple properties.

If your intention is to acquire one property it is possible to identify including a provision that states you have the right to only acquire one. By including the added limitation it is possible to receive any residual exchange proceeds after you have acquired the one property you have the right to acquire.

As you can see section 1031 contains many fine nuances that you may only become aware of when they effect you.

The exchange process can be quite complicated though with proper planning even the most complex of deals can be navigated effortlessly. We encourage prospective exchangors to call to discuss their proposed deals, a little education and planning can make all the difference.

We have always said that Exchanging is not a tax, legal or escrow decision, it is an investment decision.

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"WASHINGTON STATE LAW, RCW 19.310.040, REQUIRES AN EXCHANGE FACILITATOR TO EITHER MAINTAIN A FIDELITY BOND IN AN AMOUNT OF NOT LESS THAN ONE MILLION DOLLARS THAT PROTECTS CLIENTS AGAINST LOSSES CAUSED BY CRIMINAL ACTS OF THE EXCHANGE FACILITATOR, OR HOLD ALL CLIENT FUNDS IN A QUALIFIED ESCROW ACCOUNT OR QUALIFIED TRUST." RCW 19.310.040(1)(b) (as amended)

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