1031 exchanges are a great way to defer taxes when you sell an income property and replace it with another. But the IRS has strict rules, and the process is complicated. That’s why you need an advisor with expertise in 1031 exchanges to guide you through the process. With so many options out there, it can be hard to know what to look for. In this blog post, we’ll cover insider tips on selecting a 1031 exchange advisor.
Look for a Qualified Intermediary (QI)
A QI is an independent, third-party intermediary that facilitates the 1031 exchange by holding the proceeds from the sale of the relinquished property and using them to purchase the replacement property. As an investor, you cannot touch the money between the sale and purchase of the properties. You want to make sure that the QI you select has experience and a good reputation in the 1031 exchange field. They should be willing to provide references and answer any questions you have.
Check for Credentials
Credentials are important because they show that an advisor has a certain level of expertise and education. Look for advisors with credentials such as a Certified Exchange Specialist (CES®), a member of the Federation of Exchange Accommodators (FEA), or a licensed attorney or CPA with experience in 1031 exchanges. These credentials show that an advisor has gone through rigorous training and has knowledge in the field.
Look for Experience
Experience is key when selecting a 1031 exchange advisor. Look for someone who has at least five years of experience in the field and has successfully completed multiple 1031 exchanges. The more experience an advisor has, the more likely they are to have encountered and resolved complex issues that may arise during the exchange.
Ask About Fees
The fees associated with a 1031 exchange can vary among advisors. Make sure to ask about all fees associated with the exchange, including the QI fee, legal fees, and potential fees for tax advice. You can compare quotes from multiple advisors to see which is the most cost-effective.
Communication is Key
A good 1031 exchange advisor should be able to communicate clearly and promptly with you. They should be able to provide answers to your questions and give you updates throughout the exchange process. Make sure to ask about their communication policy and see if they have any testimonials from previous clients about their communication skills.
Conclusion:
Choosing a 1031 exchange advisor is an important decision that can save you money and help you successfully complete a 1031 exchange. Look for someone who is experienced, has the right credentials, and communicates effectively. Don’t be afraid to ask questions and compare quotes from different advisors. With these insider tips, you’ll be able to find the right advisor to guide you through the 1031 exchange process.