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TRANSFER EXCHANGE, INC. is a Qualified Intermediary for tax
deferred exchange transactions, as defined by Internal Revenue
Code Section 1031.
TRANSFER EXCHANGE, INC. was incorporated in 1997 to meet
the increasing needs of exchanges in the Medina area and has
quickly developed a reputation for great service and integrity.
TRANSFER EXCHANGE, INC. is able to offer the highest
level of safety and security. Each exchanger's proceeds are
deposited locally in separate bank accounts. The exchanger is
able to keep all interest derived from the account which is
applied at the conclusion of the exchange.
TRANSFER EXCHANGE, INC. handles all exchange variations
including simultaneous, delayed, build-to-suit, and reverse
exchanges. Exchange documentation can be generated within a few
hours, if necessary. We are available from 8:30 am to 5:00 pm
Monday through Friday to answer any exchange related questions
or check on the status of a current transaction.
TRANSFER EXCHANGE, INC. can meet with agents and clients
in their own office to discuss particular exchange transactions.
Whatís a 1031 Exchange ?
Section 1031 of the tax code provides one of the best strategies
for the deferral of capital gain taxes which would ordinarily
arise from the sale of investment property. Exchanging defers
the realization of the capital gain tax, leaving the property
owner with substantially more proceeds to reinvest in a
- Assignment Agreement - A document used to transfer contractual
rights (but not necessarily obligations) to a third party. Often
used to assign the Purchase/Sales Contract between the
exchanger, the Qualified Intermediary and either the buyer or
- Basis - Method of measuring investment in an investment property
for tax purposes. The following formula provides an approximate
estimate of the adjusted basis: [Purchase Price + Improvements]
- Depreciation Deducted = Adjusted Basis.
- Boot - Fair market value of non-qualified (not like-kind)
property received in an exchange. Examples: cash, notes [seller
financing], furniture, supplies, reduction in debt obligations.
- Capital Gain/Loss - The increase (or decrease) in the amount
received from a sale or exchange over the adjusted basis of the
- Constructive Receipt - A term referring to the control of
proceeds by a taxpayer even though funds may not directly be in
- Exchange Agreement - A document used to establish the
contractual relationship between the parties to an exchange
which restricts the Exchanger's access to the exchange funds and
outlines the responsibilities of the Qualified Intermediary.
- Exchanger - The party completing the exchange. The IRS uses the
- "Like-kind" Property - Any property used for the productive use
in a trade or business or for investment is deemed to be
like-kind with any other property to be used for the productive
use in a trade or business or for investment. The way the
property is utilized, and not the type of property, determines
if it is like-kind. Like-kind refers to the nature or character
of the property and not its grade or quality. Examples of
like-kind property can include: single family residential,
multi-family residential, retail, manufacturing, condominiums,
offices, industrial warehouses and bare land. As a general rule,
real property is like-kind as to all other real property except:
(1) An interest in a partnership (2) Primary residences and
vacation and/or second homes (3) Inventory (defined as property
held for sale).
- Qualified Intermediary - An entity who is not an agent of the
taxpayer or a is qualified person and enters into a written
agreement with the taxpayer (the "Exchange Agreement"). The
Exchange Agreement must require that the Qualified Intermediary
acquires the relinquished property from the taxpayer, transfer
the relinquished property, acquire the replacement property, and
transfer the replacement property to the taxpayer.
- Relinquished Property - The property "sold" by the exchanger.
This is also called the "exchange," "downleg," or the "phase I "
- Replacement Property - The property acquired by the exchanger.
This is also called the "acquisition," "upleg," or "phase II"
- Reverse Exchange - "Safe Harbor" Reverse Exchange Rules The IRS
Revenue Procedure 2000-37 creates the presumption that if
Transfer Exchange, Inc. owns the "parked" property for not more
than 180-days the transaction will qualify as a 1031 exchange if
the transaction falls within this "safe harbor" of the Rev.
Proc. If the Exchanger does not acquire the parked property from
Transfer Exchange, Inc. within the 180-day period, the safe
harbor" presumption will not be available and the transaction is
referred to as a non-safe harbor transaction. The IRS Revenue
Procedure 2000-37 creates the presumption that if Transfer
Exchange, Inc. owns the "parked" property for not more than
180-days the transaction will qualify as a 1031 exchange and the
transaction falls within the "safe harbor" of the Rev. Proc. If
the Exchanger does not acquire the parked property from Transfer
Exchange, Inc. within the 180-day period, the "safe harbor"
presumption will not be available and the transaction is
referred to as a "non-safe harbor" transaction. Transfer
Exchange, Inc. acts as an Exchange Accommodation Titleholder
("EAT") in Safe Harbor "reverse" exchanges if the transaction
will be a "non-safe harbor" other ownership arrangements can be
created. If Transfer Exchange, Inc. acquires the Replacement
Property ("exchange last"), the Exchanger must "identify" the
intended relinquished property within 45 days of the date
Transfer Exchange, Inc. acquires the Replacement Property. The
Exchanger can provide 100% financing to Transfer Exchange, Inc.
for the purchase of the "parked" property. The "safe harbor"
also permits the leasing of the parked property by Transfer
Exchange, Inc. to the Exchanger on a net-lease basis with
nominal rent. Transfer Exchange, Inc. must, however, report the
ownership of the parked property on its own tax return.
- "Starker" Type Exchanges - Popular term for the delayed exchange
variation upheld in Starker v. United States, 602 F.2d 1341 (9th
- Section 1031 Tax Deferred Exchange - A deferred exchange is
defined as an exchange in which, pursuant to an agreement, the
taxpayer transfers property held for productive use in a trade
or business or for investment (the "relinquished property") and
subsequently receives property to be held for productive use in
a trade or business or for investment (the "replacement
1031 DOíS AND DONíTS
- -DO advanced planning for the exchange. Talk to your accountant,
attorney, broker, lender and Qualified Intermediary.
- -DO attempt to sell before you purchase. Occasionally Exchangers
find the ideal replacement property before a buyer is found for
the relinquished property. If this situation occurs, a reverse
exchange (buying before selling) is the only option available.
Although there is considerable legal precedent for reverse
exchanges, Exchangers should be aware they are considered a more
aggressive exchange variation because no clear IRS guidelines
- -DO NOT miss your identification and exchange deadlines. Failure
to identify within the 45 day identification period or failure
to acquire replacement property within the 180 day exchange
period will disqualify the entire exchange. Reputable
Intermediaries will not act on back-dated or late
- -DO NOT plan to sell and invest the proceeds in property you
already own. Funds applied toward property already owned
purchase goods and services, not like-kind property.
- -DO NOT dissolve partnerships or change the manner of holding
title during the exchange. A change in the Exchanger's legal
relationship with the property may jeopardize the exchange.
REASONS TO EXCHANGE
- Cash Flow: Exchange land for improved property.
- Appreciation: Exchange commercial property for single family
rentals that appreciate faster.
- Easier Sale: Exchange for a property that is easier to market
- Less Management: Exchange rentals for raw land or for property
that can be professionally managed.
- Better Location: Exchange property from a run-down location to a
- Accomplish Goals: Exchange one large property into multiple
properties to leave for heirs.
- $750.00 Simple Exchange
- $2,500 Reverse Exchanges and legal fees
URL : www.eztransfer.com
800-731-1031 Toll Free