Discover 1031 Exchanges:

A Tailored Solution

What fits your needs best?

A 1031 exchange is a standard transaction that may begin to seem routine to seasoned investors. However, the nuances of each exchange vary, which can dramatically affect the outcome of the exchange. Whether you’re conducting a standard exchange or a more complex transaction, we are closely familiar with the specific IRS regulations.

Delayed 1031 Exchange:

The most common exchange type is where you sell a property and purchase a new one within 180 days. Madison 1031 handles the entire process, so that everything can be properly documented and compliant.

Reverse Exchange:

In a reverse exchange, the replacement property is acquired before selling the relinquished property, or vice versa. Following IRS regulations, our team coordinates this complex transaction by holding the replacement property in an Exchange Accommodation Titleholder (EAT) structure until the original property is sold.

Construction Exchange:

This option allows you to use sale proceeds to improve a replacement property. Madison 1031 helps structure your transaction to meet IRS rules by holding the property in an EAT structure while renovations are occurring.

Delayed 1031 Exchange:

Reverse Exchange:

In a reverse exchange, the replacement property is acquired before selling the relinquished property. Following IRS regulations, our team coordinates this complex transaction by holding the replacement property in an Exchange Accommodation Titleholder (EAT) structure until the original property is sold.

Construction Exchange:

Find the Right Solution for Your Exchange

Exchange FAQs

On the Basics

On the Process

Step 1
Contact Madison 1031 and arrange for us to act as the Qualified Intermediary for your exchange. If we are contacted before the contract of sale is signed, we can provide a Relinquished Property Addendum to the contract so that the buyer is aware that of the §1031 exchange. The exchanger can also contact us after the Contract of Sale is signed, but before the property closes/is sold.

Step 2
Madison 1031 prepares the exchange documents and coordinates with the attorney, lender, Realtor and/or Closing Agent to prepare for the closing of the Relinquished Property.
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Step 3
At closing, Madison 1031 -- as the Qualified Intermediary for the exchanger -- receives the proceeds from the sale and places the §1031 exchange funds in a secure, dual-signatory account.
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Step 4
Within the next 45 days from the sale of the Relinquished Property, the exchanger must identify the potential Replacement Property/ies and begin negotiations on which to purchase.
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Step 5
The exchanger must choose a specific Replacement Property and agree to terms with the seller. This information is then provided to the exchanger’s attorney and Madison 1031. Closing must be no later than 180 days after the date of sale of the Relinquished Property.
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Step 6
At closing, Madison 1031 transfers the §1031 exchange funds to the seller of the Replacement Property, and the exchanger then takes title ownership of the Replacement Property.

On the Funds

On the Rules

Many factors can affect the validity of a §1031 exchange, but the following are basic rules that apply to most §1031 exchanges.
The Like-Kind Property Rule - IRC §1031 allows a property owner to exchange one investment property for another investment property that is considered ‘like-kind’. With real estate, the owner can exchange any investment property for another real property. Real property cannot, however, be exchanged for a different kind of investment such as an airplane. Additionally, the owner cannot include his/her personal residence in the §1031 exchange.

The Equal or Greater Value Rule - In order to defer all capital gains tax, the new / Replacement Property should be of equal or greater value than the Relinquished Property (the original property being sold).

The Identification Rules - The exchanger must submit a signed, written statement to an unrelated third party – such as the Qualified Intermediary -- identifying potential replacement properties no later than 45 days after closing on the Relinquished Property. To qualify, the potential Replacement Property(ies) identified must satisfy one of the following rules:

· The Three Property Rule: Identify three properties regardless of their market value.

· The 200% Rule: Identify any number of properties as long as their combined fair market value does not exceed 200% of the fair market value of all relinquished properties.

· The 95% Rule: Identify any number of properties, no matter what the aggregate fair market value, provided that 95% of the value of the identified properties are acquired.

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