1031 Exchange. No this isn’t the hottest new nightclub in Steamboat Springs nor is it a dating website. A 1031 exchange is a tool that can be used in Real Estate transactions to defer and at times lessen the tax burden from a sale of property. The main rule is that it cannot be used for your primary residence but rather on second homes and investment property. In a resort town like Steamboat this can be a great benefit to property owners. Of course with anything related to the Internal (or infernal?) Revenue Service there are very specific rules and regulations governing this option. Also as predictable, with almost every rule and regulation there are exceptions. How does one sort out what can work and what is not allowed?

Most people lean heavily on their accountant or attorney when it comes to such matters but it is nearly impossible for these professionals to keep up with the ever evolving nuances associated with the 1031 exchange. Therefore there is a 1031 Exchange specific profession called a Qualified Intermediary or QI, or as I like to call it a dyslexic IQ. Interestingly enough there are no license requirements to become a QI. Unlike almost every other aspect of Real Estate like Brokers, Mortgage Lenders, Appraisers etc. that requires examinations, licensing and continuing education a QI can simply hang a shingle and be in business. Since the Qualified Intermediary is required to hold money for what could be an extended period of time between transactions this can be a dangerous cocktail. In the past year there are numerous examples of QI’s absconding with their clients funds. So how do you safeguard your hard earned money and still take advantage of this tax deferred program? As Exclusive Buyer’s Agents working to protect our client’s interests we have found certain QI’s that stand above the rest. I guess you would have to refer to them as qualified qualified intermediaries.

Briefly, a 1031 Exchange is where you sell an investment property and exchange it for another Real property. You have 45 days from the closing of your first property to identify another property that you wish to purchase and 180 days to complete the transaction. There are several details and exceptions and it might take a couple of years of planning and strategizing to be in a position to take advantage of this program. So if you are thinking about selling your investment property, second or vacation home call us and we can give you the basics on the 1031 Exchange program and more importantly we can get you in touch with a qualified QI that can aid you through the transaction.