Western Title is more than
just title and escrow.
We offer in-house 1031 Exchanges with Western Exchange!
1031 EXCHANGES with WESTERN EXCHANGE
Welcome to Western Exchange Services, LLC! We are a Qualified Intermediary registered with the State of Nevada and a subsidiary of Western Title. We have performed tax deferred 1031 exchanges since 1990. Having participated in 1031 exchanges in 43 states, we are well acquainted with the closing procedures beyond the escrow system in the Western United States. Section 1031 of the Internal Revenue Code requires the use of a Qualified Intermediary for tax deferment.
What is a 1031 Exchange?
Section 1031 of the Internal Revenue Code defines a 1031 exchange as…. “No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like-kind which is to be held either for productive use in a trade or business or for investment.”
Contrary to what some believe as a simple barter between two parties; a 1031 exchange is actually a relinquishment (sale) of real property used as an investment (income producing) property followed by a purchase (acquisition) within 180 days of the subsequent sale, which also be must be real property to be used as an investment property in order to defer four different taxes.
What is a Qualified Intermediary?
A Qualified Intermediary acts as a facilitator, accommodator, coordinator or middle person in a 1031 exchange. We prepare all related documentation and coordinate the 1031 exchange with closing agents and real estate agents. We also receive, hold and safeguard the 1031 exchange proceeds throughout the exchange period; this prevents the taxpayer from having actual or constructive receipt of the proceeds which would be a disqualification act under section 1031.
The State of Nevada requires a Qualified Intermediary to be registered and licensed by the Division of Financial Institutions of the Department of Business and Industry. The registration and licensing act requires a bond, financial analysis by the State and an FBI background check of the principal parties of the Qualified Intermediary company. Western Exchange Services, LLC and its principle officers are registered under this act.
When should I enter into a 1031 Exchange?
This is critical because entering into a 1031 exchange must take place prior to the closing of the relinquished property. Ideally, once the taxpayer has accepted an offer on the property being relinquished we would be notified so there is sufficient time to prepare and forward the exchange documents for review by the taxpayer and the closing agent. The closing agent would need to revise documents on their end knowing the transaction has become part of a 1031 exchange. If the 1031 exchange was not planned in advance, we can initiate a 1031 exchange at the last minute but that is not ideal for all parties involved. Remember, once closing is complete, it is too late to enter the sale into a 1031 exchange and the sale would be a taxable event.
Are there any other requirements?
Yes! For further details contact Cindee Baker at firstname.lastname@example.org.
This is for informational purposes only. It is not and may not be construed as legal or tax advice.
Western Exchange is not a law firm or CPA’s and does not offer legal or tax services of any kind.
Western Exchange serves as a Qualified Intermediary only.
Any interested party must seek financial, legal and /or tax advice to review their individual situation.
"Washington state law, RCW 19.310.040, requires an exchange facilitator to either maintain a fidelity bond in an amount of not less than one million dollars that protects clients against losses caused by criminal acts of the exchange facilitator, or to hold all client funds in a qualified escrow account or qualified trust that requires your consent for withdrawals. All exchange funds must be deposited in a separately identified account using your taxpayer identification number. You must receive written notification of how your exchange funds have been deposited. Your exchange facilitator is required to provide you with written directions of how to independently verify the deposit of the exchange funds. Exchange facilitation services are not regulated by any agency of the state of Washington or of the United States government. It is your responsibility to determine that your exchange funds will be held in a safe manner."