1031 Exchange Services

In a 1031 Exchange, the main services come from a qualified intermediary (QI), also known by names like facilitator or accommodator. The services are offered on fee-for-service basis. The services from the QI include paperwork, oversight, escrow services and making a bona-fide exchange agreement under section 1031 of the Internal Revenue Code.

For Deferred Exchange treatment, the IRS and the Treasury Department have very rigid requirements. Therefore, to pass these requirements, the services from an experienced professional are essential.

To get the services right, it is essential to ascertain the credentials of the service provider before hiring. In a 1031 Exchange, physical possession or receipt of the money resulting from sale of the property is not allowed, and money is held by the QI only. Therefore, his credibility in terms of bonding, background, reputation and financial strength of are crucial.

The QI is supposed to put the exchange fees in a separate account for the taxpayer, and not commingle that money with any other exchange.

There are several private agencies that maintain a database of qualified intermediaries across the United States. They can be of use in selecting the right intermediary with a good reputation, high level of bonding, competitive fee schedule, financial strength, expertise and integrity.

In the exchange process, the quality of the services is marked by speed, accuracy and safety. A good QI will have concern for the safety of the client’s funds. Through unique exchange accounts he can ensure that the funds cannot be deposited or withdrawn without signatures from both the exchanger and the company. Many taxpayers had the bitter experience of exchange funds misused by unscrupulous intermediaries. Every aspect of the exchange has to be managed according to the IRS rules and regulations.

The build-to-suit exchange is now becoming popular, where the QI is a major player. Also called construction or improvement exchange, this variant has the QI himself acquiring fee ownership of the replacement property and making improvements to it.

After the necessary improvements are done, within the exchange period of 180 days, the ownership is then transferred to the Exchanger.

This new variant of the exchange gives the investors a high degree of flexibility and the opportunity to improve upon an existing property or construct a new replacement property itself. Thus, the range of services provided by the QI and associates are unlimited from the word go.

1031 Exchange Forms

Typically, the 1031 Exchange involves forms like brokers’ price opinion, exemption and nonresident waivers, affirmation of residency, declaration of trust, IRS 8824 like kind exchanges, lien waivers, mortgage interest deductions, multifamily mortgage applications, notice of trustees sale, personal financial statements, power of attorney, promissory note, quit claims, schedule of income property, signature affidavit AKA statement or tax information release forms.

IRS Form 8824 has three purposes. It is not very complicated to fill if the three main purposes are understood correctly. The first one is to help the taxpayer report the dates of sale and replacement property closings, together with identification dates. This is to verify 45/180 date requirements. This information has to be in Part One.

Second is for the taxpayer to highlight their sale and purchase numbers (sale price, selling expenses, adjusted basis, depreciation taken, cost of replacement property) in order to make clear whether there was a full or partial exchange. This information should go in Part Three.

The third purpose is to show the new tax basis of the replacement property. The exchange being a deferral of taxes, the gain incurred by the taxpayer in the old property has to show up in the new property through an equal amount of lesser basis. This information must be there in Part Four.

The information in IRS Form 8824 makes the job of the IRS easy, to review a taxpayer’s prior 8824 Forms to ascertain the appropriate amount of taxable gain and see whether taxes are paid as and when the taxpayer decides to sell and not exchange.

But the exchanger or investor need not be baffled by the forms. The companies hired by the investor would provide the guidance and assist them in filling them out. The follow-up is also their responsibility.

Other forms include General Forms and the Official Identification Form to identify Replacement Properties to be returned not later than 45 days after the close of the Relinquished Property. W-9 Form is to request a Taxpayer ID for the investor. Form 593-C is meant for California Residents doing any sort of exchanges.

Forms related to funding issues include Request for Verification of Funds. This is to obtain a statement of the balance in the account, for the client himself or third parties, lenders, etc. The Miscellaneous Disbursement Request form is for releasing disbursements for appraisals, inspection fees, loan fees, etc.

Request for Return of Exchange Funds is for releasing the remaining exchange funds after the exchange is completed, and not for requesting closing money. Earnest Money Deposit Request is for the closing agent, and not for requesting closing money.

There are two major forms of tax-deferred exchanges–simultaneous exchange and delayed exchange. Numerous variations of these two fall into one category or the other.

The most basic type of exchange is the simultaneous exchange, known as In Lieu Exchange. To illustrate, in simultaneous exchange, the seller wants to sell the property A, agreeing to accept Property B in lieu of cash payment. If the Buyer already owns Property B, then the two parties simultaneously transfer their respective properties adhering to the value rules.

In the case of the buyer not owning property B, the buyer must purchase Property B and transfer it to the seller simultaneously with transfer of Property A to the buyer. To preserve the tax-deferred status of the transaction for the seller, he must not receive any cash or debt relief.

The other is delayed exchange known as a Starker exchange. This delayed exchange is done using a Qualified Intermediary (QI). In this type, the seller closes the sale of his property and escrows the proceeds of the sale with a QI. Here the seller is handicapped from taking possession of the proceeds in order to enjoy the tax-deferral status of the transaction.

After closing the sale of his property, the seller gets 45 days to identify the property or properties to be exchanged and should submit that in writing to the QI. The identified properties have to be purchased within 180 days of the sale of the relinquished property.


Like a stock exchange, a commodity exchange is also an organized market that functions under established rules and regulations. This market is meant for the purchase and sale of commodities. The commodities, which are generally traded in at the commodity exchanges, include natural produce of the soil, mineral products like lead, copper and some manufactured products like cotton goods, hides, skins, and sugar.

All of commodities do not lend themselves to dealings on the commodity exchanges. Generally speaking, products, which possess certain predefined characteristics, are dealt in at the exchanges. The commodity must be homogeneous, that is to say, all units of the lot of a particular commodity must be perfectly identical so that all dealers may mean the same commodity when they mention it in their dealings.

The commodity concerned should be such as will lend itself to grading. Unless it can be classified into recognized and well-known grades, trading will not be very quick, for every time the quality will have to be ascertained. In commodity exchanges, grades of commodities serve as a sufficient indication of the intention of the dealers. Commodities must be durable so as to last for the period of a future contract (ordinarily more than one year). If it perishes rather quickly, contracts for its purchase and sale will be frustrated.

The trading in the commodity must be sufficiently large so as to support the cost of facilities for the purpose provided by the exchange. In other words, there must be steady demand for the commodity. There must be frequent fluctuations in the price of the commodity. If that is not so, the speculators will have no incentive to speculate in it at the exchange. The supply of the commodity must be free and open, and should not be monopolized or controlled by one or a few persons. In addition, the government must not control the supply, and its price must not be regulated by government action.

1031 Exchange

Section 1031 in the Internal Revenue Service is a boon for a prospective investor, selling an investment property and wanting to make a profit by reinvesting in a similar property elsewhere in the country. This wonderful concept works on the principle of gain rolling from the old to the new.

There is widespread ignorance on the modalities about this exchange; as a result, 30-40 percent of property owners end paying tax during the sale. Exchange 1031 not only fructifies into essential tax savings, but also makes possible the swapping of property in the fairest manner at places of choice. No wonder that the 1031 Exchange excites the property market so much.

The new income-generating replacement property gives the investor the double gain of added income and savings from tax that would have otherwise gone to the IRS coffers.

Besides saving the buyer from a huge tax burden coming in the guise of capital gains, the instrument offers maximum immunity and flexibility in reinvesting the money gained from the sale in a replacement property within a given period.

The exchange being time-bound is no kid’s play either. In every exchange of this kind, Qualified Intermediaries (QI) plays a crucial role connecting the buyer and seller. The Federal Tax Code makes service of QI mandatory since 1991 in any exchange.

The federal nature of the 1031 Exchange regulations make the Qualified Intermediary play a wizard in guiding and structuring the exchange, satisfying all parameters and suiting the goals of the clients. It is the QI who does the paperwork required by the IRS to document the exchange. The QI carefully prepares all documents and serves the parties with copies of the exchange agreement, novation agreement and escrow instructions.

The Exchange Agreement reads like a contract between the Exchanger and a Qualified Intermediary. The Exchanger explicitly agrees to transfer his old property to the Intermediary, in lieu of a new property to be supplied by the latter within 180 days. The contract outlines all terms and conditions under which the exchange of properties should take place.

For a 1031 Exchange to take effect, both the old property as well as the new property should be in the category of investment property, capable of generating income. The examples could be rental property, bare land, vacation homes or more.

As soon as the old property is sold, within 45 days the seller has to come out with a list containing two or three probable properties fit for replacement. And the whole process of purchasing the new property or replacement property from the list must be over in a period of 180 days.

The exchange becomes bona-fide only when the title stays intact and whosoever held title to the old relinquished property gets the title of the new property.

In between the sale and purchase of property, the seller of the old property would get no access to the money he accrued from the sale, as the money will be vested with the ‘Qualified Intermediary’ till the exchange gets over.

This 1031 Exchange process has matured and had many names in the past including Like Kind Exchange, Deferred or Delayed Exchange, Simultaneous or Concurrent Exchange, Starker Trust or Exchange, Alderson Exchange, Reverse Exchange, Two, Three, or Four Party Exchange and Baird Exchange.

Instant Whole Life Insurance Quotes

A whole life insurance policy is a good long term investment vehicle if you are not planning to benefit from it yourself, unless you know that you will live until you are 100 years old. Whole life insurance policies terminate when you reach your 100th birthday, after which you will receive cash equivalent of the policy. But a whole insurance policy is meant to cover your hospitalization and medicine expenses caused by illnesses, accidents, or your death. You may borrow from it, though, and the loan may be paid for by your premium. You may also wish to cancel it and obtain the cash value of your payments.

If you are interested, you may access any of the insurance broker Web sites and request an instant whole life insurance quote. The quote you receive may not be the exact amount you will pay in premium once you do obtain the policy. The quote is based primarily on the information you provide the insurance company.

You will need to disclose your birth date, including the year. This is because the amount of your premium largely depends on how many more years you can actively contribute to your insurance plan. The younger you are, the lower your contribution will be compared to people older than you. The health and death risks will also be factored in the equation. And of course, the amount of coverage or policy also dictates how much you need to contribute. A smaller policy will not be too hard on your pocket. So choose wiselyx97 know how much will keep your benefactors cushioned against the financial implications of your death.

If it is investment with a return you can enjoy during your lifetime that you are looking for, you may be better off with term insurance policies and other vehicles with shorter life spans and maturity.

1031 Exchange Companies

The easiest method to begin a 1031 Exchange transaction is to contact a good Exchange Company. The information concerning the exchanger, time and place of the closings, and a copy of the contract to sell the relinquished property are the preliminary papers to start the process.

From this information, the company makes exchange documents and forwards them to the attorney or customer. The lowest fee charged on a standard deferred exchange is $600.

A 1031 Exchange, like any real estate transaction, involves balancing competing pressures in speed and quality. Therefore, companies in this line recognize pressures and design their service to satisfy both.

Good companies manage all aspects of the exchange. They provide service that is quick, easy to use and backed by experience. In good companies, experienced attorneys are the managers. The senior staff will be rich in experience with regard to investment property transactions. The specialized team of attorneys mainly deals with more complex reverse and build-to-suit exchanges.

The main parameters that distinguish a good and bad exchange company are speed, service and the security they offer the client. Speed lies in the pace at which the company prepares the document. The documents are then sent to the closing table, allowing the seller to close and proceed with the exchange. Service is the dexterity in preparing all documents required for the exchange, including reminders of 45 and 180-day time limits and extensive complimentary consultations.

Security comes in the form of an unconditional guarantee on exchange funds from Insurance Companies: high value fidelity bond coverage and Professional Liability insurance cover.

These days, banks are working with Exchange Service providers. The Cole Taylor Bank of Chicago is one of the largest independent banks in Chicago, and joined hands with Nationwide Exchange Services (NES) of Cupertino in California in a strategic alliance for handling Cole Taylor’s tax-deferred 1031 Exchange business. This Chicago bank specializes in serving the business banking, real estate lending and wealth management of closely-held and family owned small and mid-sized businesses. Cole Taylor Bank is an Equal Housing Lender.

Nationwide Exchange Services is a leading Qualified Intermediary for Tax-Deferred 1031 Exchanges and has conducted thousands of successful 1031 Exchange transactions. It is applying advanced technologies and secure business processes to enhance standards of financial security, visibility and customer service to establish new standards for products and services in 1031 tax-deferred Exchanges.

The alliance enabled the Bank to become part of the NES team and benefited in becoming the primary financial custodian for NES in the Midwest Region. The alliance also helped the bank to offer their customers an expanded set of tax-deferred 1031 Exchange products, such as reverse and build-to-suit exchanges, at the most competitive cost structure.

The systems from NES combined with the bank Cole Taylor’s financial security and brand recognition has spurred confidence in the customers. Collaboratively, they bring distinct advantages to all 1031 customer sets, right commercial developers and corporate entities to individual investors.

Angel Investor Groups

Angel investor groups are acquiring better acknowledgment as primary patrons in early-stage industry, attaining eminent rankings in industry-related annual surveys of private equity investment firms for entrepreneurs.

Angel assets are an up-and-coming part of the financial order, similar in significance to venture capital in the Seventies, according to experts in the field. Angel groups are starting to be viewed with importance by the present financial companies.

An important angel investor group is the Band of Angels, a formal assemblage of 100 current and former high-tech executives who put in their time and money into fresh, progressive startup companies. Band members have established reputed companies like Symantec, Logitech, and National Semiconductor.

Angels are characteristically high-net-worth persons or “cashed out” entrepreneurs who are involved in nurturing other entrepreneurs and are vigorously associated with the ventures they support, both pre-funding and post-funding. Recently, a growing number of angels have come together to develop angel groups, with a view toward putting together capital and investment proficiency. There are an estimated 200 such angel investor organizations in the United States.

Angel investor groups have emerged as important participants in offering equity capital to early-stage ventures. Angels have developed from investing as individuals and at times fashioning informal groups for particular investments, to forming official groups with vigorous venture-capital-like procedures.

With the venture capital society becoming more complicated, angel investor groups have also changed according to the needs of the new situation. A majority of present day angel investors are highly enlightened about investments, due to the presence of experienced angel groups who have common performances.

Any individual angel investor can obtain an immense advantage from the group’s expertise if he decides to become a part of a considerate group of angel investors.

Cash For Structured Settlements 5

The structured settlement system began in the early 1970’s in Canada, and it spread to United States and Australia within a few years. A compensation agreement between a plaintiff and insurance company (defendant) for long term and tax-free payments at a time of personal injuries or damages is called a structured settlement. The insurance company will make the payment either to the claimant, surviving family member or beneficiary.

The main benefit of structured settlements is the tax-free nature of the payments over a period of time. There are times when the claimant may insist on a lump sum instead of periodic payments. This might be because the claimant wishes to purchase a new house or cover large medical bills. If the insurance company needs to pay a lump sum, it will generally sell the settlement contract to a financial institution. The defendant will pay the periodic payments to the financial institution along with handling fees including interest.

If the claimant wishes to have a structured settlement, the settlement contract needs to be sold off. If the credit rating of the insurance company is higher in the market, the claimant will achieve a higher profit margin in the sale. Thus, the claimant should be very careful choosing the defendant company, making sure it is financially sound. Before selling the settlement, the claimant needs to consider legal restrictions like tax considerations and lower purchase price offered by the buyer, etc. For instance, cashing the structured settlement makes the beneficiary liable for a tax payment; where as the same beneficiary may get tax savings as an injured plaintiff. However, it is advisable for the plaintiff to take the advice of a lawyer before deciding the sale. The lawyer will analyze the financial consequences of the sale and guide the plaintiff accordingly. Sometimes a court’s approval is needed for the sale depending upon the nature of the settlement contract. The plaintiff has another option of selling a part of the total structured settlement, so that monthly income will be received on the remaining portion. These days, people consider the structured settlement as a funding option for lawsuits.

Cash For Insurance Annuities

An insurance annuity is an investment instrument sold by insurance companies to the public. The investment insurance annuity may be either a fixed or a variable annuity. If the annuity holder pays a fixed amount to an insurance company, the company in turn pays the annuity holder regular fixed monthly amounts either for a fixed time period or for the lifetime to the annuity holder or beneficiaries.

If the contract has a stipulation of lifetime monthly payments, it is called “annuitization”. The company will make monthly payments to holders until their death. If a fixed time period is chosen for the payments, the incomes will only be received until the end of the fixed time period. The company will invest the amount obtained from the fixed annuities into government securities and bonds having low risk. On the other hand, on some annuities, holders will receive periodic payments depending on the performance of the funds or securities that the company has invested in. These annuities are called “variable annuities”.

Some annuities contain immediate periodic payout, while some have deferred. The annuity holder can obtain loan on the cash value of payments to the insurance company. The amount borrowed is not subject to tax, but the holder needs to pay some interest on the loan amount. If the holder dies before the repayment of the loan, that amount will be deducted from the death benefit. On the other hand, if the annuitant wants to cash out the policy, taxes have to be paid on the excess amount received above what has been paid in premiums to the company. The annuitant can defer tax, if any, and reduce insurance costs by converting the investment into a variable annuity. It is advisable for the annuity holder not to exchange the policy by foregoing all the financial benefits like tax exemption, regular monthly payments, etc.

Buying Investment Properties

Investment may be counted on the gross or the net basis. Net investment is gross investment minus depreciation. Investment may be ex-ante or planned or anticipated or intended investment; or it may be ex-post, i.e., actually realized investment, or when investment is not merely planned or intended, but which has actually been invested or implemented. This is so true when Buying Investment Properties.

Another classification of investment may be private investment or public investment. Private investment is on private account, i.e., by private individuals, and public investment is by the government. Private investment is influenced by marginal efficiency of capital i.e., profit expectations and the rate of interest. It is profit-elastic. Public investment is by the state or local authorities, such as building of roads, public parks etc. In public investment, profit motive does not enter into consideration. It is undertaken for social good and not for private gain.

Investment which is independent of the level of income, is called autonomous investment. Such investment does not vary with the level of income. In other words, it is income-inelastic. Autonomous investment depends more on population growth and technical progress than on anything else. The influence of change in income is not altogether ruled out, because higher income would probably result in more investment. But the influence of income is negligible as compared with the influence of population growth and progress of technical knowledge.

Examples of autonomous investment are long-range investments in houses, roads, public buildings and other forms of public investment. Most of the investment is undertaken to promote planned economic development. It also includes long-range investment to bring about technical progress or innovations. Public investment means investment which occurs in direct response to invention, and much of the long-range investment, which is only expected to pay for itself over a long period, can be regarded as autonomous investments.