Conforming to the 1031 exchange rule
Under 1031 exchange program, an investor sells a relinquished property in exchange of a replacement property without attracting any tax on capital benefits. The whole exchange process is witnessed by a qualified intermediary who provides facilities of paperwork, escrow, oversight and expertise and ensures that the transaction is conforming to the 1031 exchange rule of the IRC. According to the 1031 exchange rule, after the relinquished property has been sold, the investor has to identify the replacement property within the 45 days of the date of transfer. A maximum of 3 properties can be exchanged at a time. It is a 1031 exchange rule that the investor reinvests all the proceeds right from the sale of relinquished property. Therefore, under such circumstances, a qualified intermediary is needed to make sure that all the proceedings are as going on as per the 1031 exchange rule.
