Start An Exchange

Section 1031 of the Internal Revenue code allows you to defer the payment of taxes on gain realized on the sale of investment property if you reinvest in another investment property.

Also known as a tax deferred exchange, delayed exchange, and other terms, is described under Internal Revenue Code Section 1031. It allows you, the investor the opportunity to defer capital gains taxes owed upon the sale of investment or income producing property by exchanging the property for other like-kind property. The IRS has specific guidelines that must be adhered to for the transactions to qualify and a Qualified Intermediary must be a part of the closing to achieve a safe harbor exchange.

• When considering the sale of real estate that has been held as investment (i.e., long term appreciation) or production of income (i.e., rental, farming, etc.).
• You are selling property that was inherited and it has since appreciated over time.
• You would like to sell to geographically relocate investment property.
• You plan to consolidate multiple investment properties into a single larger property or Diversify your real estate portfolio by selling a single large property to purchase multiple investment properties.
• A business has outgrown a location or is downsizing.
• Estate planning

A Qualified Intermediary (“QI”) is a professional company that specializes in processing Section 1031 exchanges. Under the IRS guidelines, the QI acts to facilitate the transfer of the properties. The QI is hired prior to closing to prepare exchange documentation that must be a part of the closing and sets up a qualified escrow account to hold the sale proceeds during the time between the sale of the existing property (Relinquished Property) and the acquisition of the new property (Replacement Property). The law requires the proceeds from the sale of the existing property be kept from your (the seller/taxpayer) control until a suitable Replacement Property is identified and ultimately purchased and transferred to you by the QI.

WARNING: You must select a QI to facilitate the exchange prior to closing on the sale of your existing property. Waiting until after the closing will be too late!

With longevity comes stability. Craft 1031 offers you decades of exchange accommodation experience. All Craft exchange client funds are held in separate Qualified Escrow Accounts (“QEA”) for the benefit of the exchanger’s 1031 exchange.  The QEA allows for the exchange client to be a co-signer on the account. In addition, Craft Bank requires two Corporate Officer signatures along with the signature of the exchange client to transfer funds at any time. Both parties are restricted from moving the funds without the others signature. Please see our flyer QEA and Security of Funds.

When it comes down to making your decision, you should select a Qualified Intermediary (“QI “) based on its expertise, experience, integrity, and years in the exchange business. Craft 1031 Solutions (“Craft 1031”) is an independently owned Qualified Intermediary firm handling exchanges nationwide. Its Principles have 60 years of combined 1031 experience in structuring and guiding taxpayers in the successful completion of their 1031 tax-deferred exchanges.

 One of the main responsibilities of the qualified intermediary is to provide the accurate documentation required by the IRS for the defensibility of the exchange. In addition to this, the QI should provide the highest level of professionalism and the utmost safety and security of their exchange funds.

 Personalized customer service and knowing that you can reach an exchange specialist when you have questions is key to your satisfaction. You can always reach one of the Craft 1031 team when you need them.