1031 CORP.

1031 CORP. is a qualified intermediary and consulting firm that facilitates tax-deferred exchanges under Section 1031 of the Internal Revenue Code. The company is based at Providence Corporate Center in Collegeville, Pennsylvania, at 100 Springhouse Drive, Suite 203, in Montgomery County roughly 30 miles northwest of Philadelphia. The firm also maintains a presence in the Pacific Northwest through an office in Bend, Oregon, and it handles transactions involving properties located across the United States, including exchanges in which the relinquished property and the replacement property sit in different states.

A qualified intermediary, sometimes called an exchange accommodator or exchange facilitator, is an independent third party that a real property owner must engage before closing on the sale of an investment or business-use property in order to defer capital gains tax under Section 1031. The intermediary enters into an exchange agreement with the taxpayer, receives the proceeds from the sale, holds those funds so the taxpayer never takes actual or constructive receipt of them, and then disburses the funds toward the purchase of replacement property. Because the tax deferral depends on following a precise sequence of documents and transfers, the intermediary's role is procedural, administrative and time sensitive rather than advisory in the legal or accounting sense.

Services and Types of Exchanges

1031 CORP. works on the full range of exchange structures recognized under the Treasury Regulations. These commonly include:

• Delayed, or forward, exchanges, the most frequently used format, in which the taxpayer sells the relinquished property first and then acquires replacement property within the statutory time limits.
• Reverse exchanges, in which replacement property is acquired before the relinquished property is sold. These transactions typically require an exchange accommodation titleholder to park title to one of the properties under the safe harbor described in Revenue Procedure 2000-37.
• Improvement or construction exchanges, which allow exchange funds to be applied toward improvements made to replacement property while it is held by an accommodation titleholder.
• Simultaneous exchanges, in which both closings occur on the same day.

Beyond document preparation and fund handling, the firm's work generally includes reviewing the structure of a proposed transaction before closing, coordinating with the parties involved (settlement agents, title companies, escrow officers, lenders, real estate brokers, attorneys and accountants), tracking the identification and exchange deadlines, preparing the assignment and notice documents required at each closing, holding exchange proceeds in segregated accounts, and providing year-end reporting information the taxpayer's preparer needs to complete IRS Form 8824.

The Rules That Shape Every Exchange

Two deadlines govern a delayed exchange, and both begin on the day the relinquished property closes. The taxpayer has 45 calendar days to identify potential replacement property in writing, and 180 calendar days (or the due date of the tax return for that year, including extensions, if earlier) to complete the acquisition. Neither period can be extended for ordinary business reasons, which is why intermediaries place so much emphasis on early planning and on keeping a transaction on schedule.

Other core requirements include the like-kind standard, which for real property is broad and permits an owner to exchange, for example, a rental house for farmland, a retail building or an interest in certain fractional ownership structures, provided both properties are held for investment or productive use in a trade or business. Since the Tax Cuts and Jobs Act of 2017, Section 1031 applies only to real property. Rules on debt replacement, boot, related party transactions and vesting of title also affect the outcome, and the sequence in which paperwork is signed matters a great deal. A common point of confusion among first-time exchangers is that the intermediary must be retained before the sale closes, since funds that reach the seller, even briefly, generally cannot be rescued into an exchange after the fact.

Who Uses the Firm

Clients typically include individual owners of rental houses and small apartment buildings, farm and land owners, commercial and industrial property investors, partnerships and limited liability companies restructuring their holdings, and business owners selling real estate along with an operating company. The firm also serves as a resource for the professionals who advise those owners. Real estate agents, settlement and title officers, certified public accountants, financial planners and attorneys frequently bring questions to an intermediary during the planning stage of a transaction, before a listing agreement or an agreement of sale is finalized.

Because 1031 CORP. accepts exchanges nationwide, its work often involves properties in states with differing withholding rules, transfer taxes, closing customs and escrow practices. Coordinating a sale in one state with a purchase in another is a recurring part of the firm's practice, and the intermediary generally acts as the connecting point between two sets of closing professionals who may never otherwise speak to one another.

Education and Industry Involvement

The company produces educational material on exchange topics, including articles, newsletters, webinars and presentations aimed at real estate and financial professionals who need to recognize when a client may benefit from an exchange. Within the exchange industry, practitioners may earn the Certified Exchange Specialist designation, a credential administered by the Federation of Exchange Accommodators that requires documented transaction experience, an examination and ongoing continuing education. Qualified intermediaries are also expected to maintain safeguards for client funds, such as segregated accounts, dual authorization on disbursements, fidelity bonding and errors and omissions coverage, all of which are standard points of inquiry for anyone selecting an intermediary.

Location, Accessibility and Contact

The Collegeville headquarters sits within Providence Corporate Center, a suburban office campus with on-site parking. The property has a wheelchair accessible entrance and a wheelchair accessible parking lot. The location is convenient to the Route 422 corridor and the broader Philadelphia suburbs, including King of Prussia, Norristown, Phoenixville and Pottstown, though most exchange work is conducted by phone, email and secure document transfer rather than in person.

The firm can be reached at +1 800-828-1031 or through its website at www.1031corp.com. Property owners considering an exchange are usually advised to make contact as early as possible, ideally before a property is listed or at least well before the scheduled closing date, so that exchange language can be included in the agreement of sale and the necessary documents can be prepared in time. Prospective clients should also consult their own tax and legal advisors, since an intermediary facilitates the mechanics of the exchange but does not replace individualized tax counsel.