forward 1031 exchange

FIRPTA Forward 1031 Exchange

Posted on | by Tom Gustafson | Leave a Comment on FIRPTA Forward 1031 Exchange

A title company I have known and facilitated 1031 exchanges for over the years in the Florida Panhandle called to introduce one of their clients. Karen’s 1031 forward exchange was a bit unique in that she is a resident of New Zealand requiring additional Internal Revenue Service filings. The forward 1031 exchange accommodated a vacation rental property in the Florida Panhandle and acquired an investment property in Hawaii within the 180 calendar day requirement.

Foreign Investment in Real Property Act of 1980

Her CPA contacted me to assist in completing Form 8288. Every nonresident alien selling real estate must comply with the Foreign Investment in Real Property Tax Act (FIRPTA) requiring 10% of the selling price withheld and submitted to the IRS. We completed the form, submitted to the IRS in Philadelphia requesting a withholding certificate and was not required to submit the 10% which in Karen’s transaction would have represented a sizable figure. Karen chose to work with two banking service providers splitting the funds between two escrow accounts, one requiring a personal identification number and a qualified escrow account requiring dual signatures to authorize the disbursement of exchange funds. When she purchased her replacement property in Hawaii, funds were wired a couple of days in advance of the closing and the 1031 exchange was completed.

Testimonial

“You did make it easy and clear … you were the only one in the process that didn’t create a drama, ha!”

Karen Sandler, Auckland, New Zealand

 

Farmland Forward 1031 Exchange

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An Indiana farmer was looking to initiate a forward 1031 exchange, selling farmland for a vacation rental property in the Florida Panhandle. His Realtor in Florida referred him to Atlas 1031 Exchange. The Realtor called to let me know her contact that he works long hours. Born and raised around farms in Indiana, I knew what she was suggesting that it may take time to contact Dave given it was September; dry, meaning harvest time was in full swing. We first spoke on Sunday evening and I listened to his questions and explained the 1031 exchange process. Dave called later that week in the evening to ask a few more questions before deciding to work with Atlas 1031.

His Concerns Were:

  • “I don’t know Atlas 1031 or Andy.”
  • “How do I know my money will be secure and there when needed.”
  • “How complicated is this 1031?”

We talked about a 1031 exchange, the steps of the forward 1031 exchange, the banking service providers, their stability, my experience with them over the years and his options to secure his funds. Dave chose to use the personal identification number (PIN) option where the PIN known only between he and the bank, would be required to authorize the wire out. The bank called soon after the account was establised to set up his PIN. When the Florida title company was ready to close on the replacement property, I initiated the wire and the bank called Dave for his PIN. The funds were wired the same day. Dave completed the 1031 exchange before the forty-fifth calendar day so there was no need to formally identify his replacement property.

Testimonial

“How Andy explained the process is exactly how it worked. He listened and explained each answer, sometimes more than once. He was accessible, thorough and knows the 1031 inside and out. I will use Andy and Atlas 1031 again and … I am happy to help him.”

Dave Nurrenbern,
Evansville, Indiana

 

 

Aircraft 1031 Exchange Testimonial

Posted on | by Tom Gustafson | Leave a Comment on Aircraft 1031 Exchange Testimonial

This 1031 exchange was a referral from AIC Title Services in Oklahoma City, Oklahoma. The client was exchanging a Cessna 340A and replacing with Cessna 310Q with air. This was a forward exchange where the funds from the disposition were wired to a qualified escrow account and held until needed for the acquisition of the replacement aircraft.

The exchange outcome deferred a portion of the gain given cash was returned at the end of the exchange. Given the exchange was initiated in December, the client elected not to file an extension for their federal income taxes, ending the exchange on April 17th. The full 180 calendar days would have been available with the federal tax extension.

“I found Andy to be extremely cooperative and very responsive. He maintained contact with me throughout the exchange, alerting me of upcoming action steps and making the process hassle free. He did what he said he would do. I appreciate that!”

Stan Turel
Bend, Oregon

 

1031 Exchange: Vacation Property Rental

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Jeff Boll is General Counsel for SETCO Services, LLC in Perdido Key, Florida. He has worked with Atlas 1031 Exchange and Andy Gustafson for a couple of years referring clients interested in 1031 tax deferred exchanges. When it came to his personal 1031 exchange, he followed his guidance to others and engaged Andy at Atlas 1031 Exchange.

In his forward exchange, he sold a lot and acquired a condominium of greater value. It was a straight forward exchange, replacement property was identified within the 45 day time line and acquired shortly thereafter.

“The 1031 exchange was a very smooth process. I found Andy easy to work with and very professional. Though I have known and referred clients to Andy in the past, I trusted his knowledge and procedures to safeguard my exchange proceeds. VIST Bank provided monthly account statements reflecting my exchange funds balance. When if came time for the replacement funds, Andy initiated the wire out and VIST Bank called to confirm the personal identification number authorizing the disbursement. Andy responded to everyone of my emails or phone calls within the same day.”

Jeff Boll
Perdido Key, Florida

 

1031 Exchange of Vacation Property

Posted on | by Tom Gustafson | Leave a Comment on 1031 Exchange of Vacation Property

This 1031 exchange was a referral from a title company in Destin, Florida. The client sold a vacation property held as a rental and replaced with another rental property in a forward 1031 exchange. The identification of three properties was made prior to the 45th calendar day. Each property was for a purchase price greater than the property sold. The replacement property was purchased prior to the 180th calendar day.

Forward Exchange

In a forward 1031 exchange, the relinquished or old property is sold and closed starting the 180 calendar day time frame. The net equity from the sale is wired to a bank account under the Exchangor’s social security number and earns interest. A personal identification number (PIN) or qualified escrow agreement is selected requiring the Exchangor to authorize disbursement. Identification of up to three properties is faxed to the qualified intermediary prior to the 45th calendar day. The day prior to the closing on the replacement property, the net equity plus interest is wired to the title company. 1031 exchange documents are prepared for both closings in accordance with Section 1031 of the Internal Revenue Code with a summary of signed documents forwarded to the Exchangor and CPA for their records.

Testimonial

“No tax was paid and the 1031 service was efficient.”

Tom Davee
Madison, Indiana

1031 Exchange Qualified Intermediary

Posted on | by Andy Gustafson | Leave a Comment on 1031 Exchange Qualified Intermediary

1031 Exchange Qualified IntermediaryThe 1031 exchange Qualified Intermediary (QI) was one of four safe harbors the 1031 Regulations created in 1991 for use in a 1031 exchange to fulfill the requirement that the taxpayer is not in actual or constructive receipt of exchange funds or property as part of a 1031 exchange. If it is determined that the taxpayer has or had access to the funds during the exchange, the 1031 exchange may very well be nullified and taxes deferred due. A QI under Safe Harbor Number 3 is not recognized as the taxpayer’s agent for purposes of the 1031 exchange.

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