You’ll hear the term ‘exchange accommodator’, but what do they really do? In this blogcast episode, David Moore explains the term and, more importantly, what they do for you.
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Today we’re talking with David Moore, co-founder of Equity Advantage, a firm that specializes in tax-deferred investments, in particular, IRS Section 1031 exchanges.
David, what is an exchange accommodator?
David Moore:An exchange accommodator is a third party that takes an active role in a transaction that turn a sale and purchase into an exchange. You’ll hear people reference those accommodators as intermediaries, accommodators, facilitators, and I used to hear the term ‘straw man’, but that’s obviously fallen out of favor in the IRS’ eyes, so the industry has obviously moved away from that term also. But typically, like I said, it’s a third party that’s going to take part in a transaction. They’re paid a fee to accommodate an exchange.
So David, what does an exchange accommodator do for me?
David Moore: Well it depends. We like to consider ourselves at Equity Advantage exchange facilitators, so we feel we take an active role in the exchange process helping people get where they want to go. But whether you’re talking an accommodator, intermediary, facilitator, it’s a third party that’s paid a fee to structure an exchange. As far as a tax payer’s concern, maybe historically, people thought of an exchange as something where you’ve got something, I’ve got something, we swap, that rarely happens. Intermediary, accommodator, facilitator actually will allow somebody and literally sell a property, go out and buy a new property, and as long as that person fits within the timelines and the Safe Harbors provided in the Internal Revenue Code, we can actually make that sale and purchase up to 180 days later and make an exchange out of it.
It’s a thing where sure you could do a true swap, but in today’s world, why bother when you’ve got a set of rules that are in place, and the process goes back to the 20s actually. But our final guidelines, some revisions since ’91, but final guidelines issued really cleaned things up in 1991. It’s a very streamlined process today and the accommodators really help a general, honest, basic American get where they want to go. We know where somebody is today, where they want to be in two, five or ten years, and we’re going to help them get there.
Thank you, David. Listeners may call 503-635-1031 or can visit 1031exchange.com for more information.
Guidelines for 1031 exchanges are complex, and failure to follow them can expose you to significant tax liability. Using an exchange accommodator like Equity Advantage puts a professional in your corner who knows all the rules. It just takes a phone call to get started.