Tips for Choosing the Right 1031 Exchange Accommodator.
If you are a real estate investor and you are closing on a sale of your property, it is important to choose a competent qualified intermediary who will meet your needs. Here are tips for choosing the right exchange facilitator.
The exchange process can be quite overwhelming, therefore, make sure that your qualified intermediary is experienced and knowledgeable in handling exchanges and the law that governs them. A 1031 investment properties accommodator who has been in the business for long will know how best t handle the exchanges including the most difficult ones. You can start by inquiring how many clients they have worked with in the past as well as exchange processes that they did and they have successful results. They will also be able to help you understand your situation and guide you on making the right options.
Another way of establishing their reliability and competence is by requesting for client references. It is important to get in touch with each client so that you can establish whether the qualified intermediary provided them with satisfactory and reliable services. This will help you narrow down your list of potential 1031 exchange facilitators.
Ask various exchange companies where they are going to hold your funds before you make any decision. Look for a firm that will provide you with options for holding and safeguarding your funds. A safer option is to insist for the funds to be kept in a segregated qualified trust to ensure that no money can be withdrawn without yor authorization. However, if the facilitator does not give you the option of choosing a bank of your choice, it is recommended that you look for another trustworthy facilitator.
It is prudent to choose an exchange accommodator who operates full-time rather than part-time. Tax laws keep evolving, hence, a full-time facilitator will be able to help you understand these laws so that you can use them in your situation.
A good company will conduct a background check on its employees to ensure that they have no criminal records. This is an effective measure of minimizing risk of loss of your 1031 exchange fund. A good firm should provide you with internal controls which are policies that protect your funds from theft by employees.
The exchange facilitator should maintain a fidelity bond to protect all its exchangers against theft and embezzlement. The insurance is also critical so that you will not have to pay taxes because of the firm’s negligence.
Lastly, ensure that the 1031Gateway exchange company has a good reputation in the industry. It is a good sign if they are an active member in any professional organization for facilitators.