USA Tax Expert Needed, 1031 Exchange Question?

Question

Origianl question: http://answers.yahoo.com/question/index?...

I received three answers to that question which disagree. I think that is because I did not state my question clearly. Here is a better effort: I own a house which I rent out. The renter wants to buy it. He has his financing in place waiting to write me a check for the total amount. I found another house to buy to replace this rental with, which I will also rent out. I have the cash to pay for it. Can I do this transaction myself, and do a 1031 tax deferred exchange legally without hiring an intermediary, or am I forced by law to hire the intermediary?

Answer 1

Intermediary.
Treasury Regulation 1.1031(b)-2(a): In the case of simultaneous transfers of like-kind properties involving a qualified intermediary (as defined in section 1.1031(k)-1(g)(4)(iii)), the qualified intermediary is not considered the agent of the taxpayer for purposes of section 1031(a). In such a case, the transfer and receipt of property by the taxpayer is treated as an exchange.

Without that beneficial rule, once you touch the money, it is not a like kind exchange anymore. Now you've got 5 opinions you don't like.

Answer 2

The tax code provides a safe harbor for using a qualified intermediary for your 1031 tax deferred exchange. The IRS does not question your exchange when you follow the safe harbor procedure.

Why not perform a search on Yahoo or Google to find a company you feel comfortable working with? Some common terms would be 1031, Starker, Qualified Intermediary. There is a trade association called the Federation of Exchange Accomodators at 1031.org that you can search also.

Answer 3

You will need an intermediary. The rules got tightened up some years back. An escrow company may be able to do the trick, since everything seems to be in place ready to go, and you don't need time to find an exchange property.