Defer Taxes By Connecting To TIC 1031 Exchange Advisor

A TIC 1031Exchange Advisor handles the compulsory mechanics of a 1031 exchange for the taxpayer. An exchange must be made by an independent third-party according to the US treasury Regulation 1031. You will also hear a TIC 1031 exchange advisor or DST Investment professionals are also referred to as a "accommodator" or “facilitator.”

It is mandatory to have an exchange agreement and use a Qualified Intermediary so that the IRS does not consider the taxpayer to have taken constructive receipt of the proceeds from a sale/disposition. Upon closing, the proceeds of the sale will go directly to the exchange advisor, rather than the taxpayer. The qualified intermediary will then hold the proceeds until they are required to acquire a replacement property, at which time the facilitator will send the funds directly to the closing agent who deeds the property to the exchanger.

According to US Treasury Guidelines, a TIC 1031 exchange advisor or QI is defined as:

1.      A person under contract with the investor in an Exchange Agreement. The exchange advisor or QI has four specific responsibilities to the taxpayer, specifically to:

• Obtain relinquished properties from the taxpayer.
• Transfer the relinquished property.
• Obtain the replacement property.
• Transfer the replacement property to the taxpayer.

2.      A person who is neither disqualified or the taxpayer entering the exchange.

3.      The Exchange Agreement contract must state that there is a limit to the taxpayer’s rights to receive, donate, borrow, or obtain benefits of money or other property, which is held by the QI in some other method. This is in accordance with US Treasury Regulation.

Points you should find in your DST InvestmentProfessionals

An accommodator is bound by the minimum number of rules and regulations. The facilitator don’t need a license to do the exchange. Hence it is important to choose of QI wisely. Go through the following set of questions before hiring an accommodator.

·         Is fidelity bond (bond between the accommodator and taxpayer) as per occurrence or coverage?

·         Is there any policy limitation for fidelity bond coverage or not?

·         Where do you hold the funds of the client? Do you put it in Qualified Escrow Account or Qualified Intermediary Trust account?

·         What type of investment will you suggest for my funds of 1031 Exchange?

·         What is the sufficiency score of E&O insurance coverage?

·         Do you have prior experience in the field of 1031 Exchange?

·         Have you worked as a QI before? If yes, can you please tell the number of years?

Are you still confused? Don't worry, you can contact with us to get all queries solved in a hassle-free manner. Also, you can find a perfect facilitator for yourself here at 1031 sponsors.