1031 Tax-Deferred Property Exchanges
A 1031 property exchange is one of the most powerful tax deferral strategies available. Using a Qualified Intermediary, Section 1031 of the Internal Revenue Code allows you to sell real property held for investment or productive use in business, purchase other "like-kind" property, and defer capital gains. However, deviation from regulatory guidelines may disqualify the transaction, making ALL gains immediately taxable. So it is essential to choose an Exchange Accommodator with the expertise, financial strength, and stability to guide you through the process while safeguarding your funds.
How 1031 Exchanges Works
- Exchanger executes a purchase agreement with buyer and opens escrow
- Exchanger engages Pacific Premier to act as Accommodator
- Pacific Premier drafts the required documents to assign rights to the purchase agreement prior to the closing
- Once escrow closes, sale proceeds are directed to Pacific Premier as accommodator and held in a segregated account
- Exchanger has 45 days from the sale of the relinquished property to identify replacement property
- Replacement property must be acquired by the Exchanger within 180 days after the sale of the relinquished property
Who Can Qualify for a 1031 Exchange?
Any owner of investment and business property—individuals, corporations, partnerships, limited liability companies, trusts, and other tax-paying entities—may qualify for an exchange. For a complete deferral, a general rule of thumb is for the exchanger to purchase replacement property of equal or greater value than the relinquished property, reinvest all net equity, and obtain equal or greater financing on the replacement property.
Benefit From Our Expertise
Pacific Premier Bank provides the safety, transparency, and confidence with over 30 years of experience. Your funds are held in a segregated interest-bearing account, in trust for you as the exchanger, with all accrued interest credited directly to your exchange file. As your Accommodator, we adhere to the strictest professional standards in safeguarding your exchange proceeds.
- Expertly coordinate with your advisors including legal, accounting, escrow, and other tax professionals
- Securely hold your exchange proceeds in a segregated, interest-bearing bank account
- Provide all account management, including opening, transferring, and closing
- Provide account reporting on interest and transactions
If you or your client owns investment property and are thinking about selling it and buying another property, you should consider 1031 tax-deferred exchange. For 1031 exchange assistance, please call 619.340.5349 to reach our San Diego office or 213.484.0855 to reach our Los Angeles office.
Commerce Escrow does not provide tax advice. The information herein is not intended to constitute legal, financial, or tax advice. Please consult with your tax professional regarding the possible tax consequences of a 1031 tax-deferred exchange.