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Guaranteeing the Safety of Your 1031 Exchange Funds

Coins and calculatorSeveral rules govern a 1031 exchange. One of these is the 45-day rule for the identification of your replacement property. During this time, you have no access to the proceeds from the trade of your relinquished property. Most investors are anxious about losing their hard-earned cash during this period and avoid 1031 exchanges altogether.

Though this is a genuine concern, it should not stop you from benefitting from the tax breaks of a 1031 transaction. In Utah, you can find a 1031 exchange company like 1031 Exchange Place to guarantee the security of your funds.

Have a Separate Escrow Account

Some investors opt to have their funds held in one account with their intermediary to minimize costs. Still, it is safer to have a segregated escrow account that only contains your funds. Though this attracts extra fees, it enhances your funds’ security.

Opt for a Dual-signature Account

If you decide to hold your fund in your qualified intermediary’s operating account, go for a dual-signature option. This account will need two signatures before the releasing of funds. These include your signature and that of your qualified intermediary, as the company remains the account’s primary holder.

Work with a Company with Insurance and Bonds

Working with a 1031 intermediary with insurance boots your funds’ security. The fidelity bond insures the company against fraud, while the errors-and-commission insurance covers clients’ claims for fund misuse. The existence of bonds and insurance lessens the risk of loss.

With the given guidelines, you can now confidently opt for a 1031 exchange. 100% transparency from your qualified intermediary also goes a long way in giving you peace of mind. Be sure to document your terms and conditions.

October 16, 2018 at 1:00 amFinance