Frequently Asked Questions

The QI acts as a middleman in the exchange process. The QI will handle the exchange of proceeds, coordinate the details with the closing agents, prepares necessary exchange documentation, and more!

If the transaction has closed and funds have been sent to the seller. However, you can still use an exchange all the way up to closing day!

 There are strict rules regarding personal use for vacation and second homes. During the first 24 months of ownership, you can use the property 10% of the days that you rent the property out. (100 days rented - 10 days use)

If it is prior to your 45-day mark, you would simply not identify any properties and notify your exchange officer that you wish to have the funds returned to you on day 46. If you have identified properties and are past the 45-day mark, your funds will be released on day 181 back to you. All funds returned back to you will be eligible for taxes.

A 1031 tax exchange drop and swap can take place in several different ways.  As mentioned above, when the majority of members wish to cash out, the taxpayer can transfer his membership interest back to the LLC in consideration of his receipt of a deed for a percentage fee interest in the property equivalent to his former membership interest.  The taxpayer would then own a tenant in common (TIC) interest in the relinquished property together with the LLC.  At closing, each would provide their deed to the buyer, and the former member can direct his share of the net proceeds to a qualified intermediary.

At times, the majority of members will wish to complete an exchange and one or more minority members will wish to simply cash out.  The drop and swap can be used in this instance also by dropping applicable percentages of the property to the exiting members while the limited liability company completes an exchange at the LLC level and the former members cash out and pay the taxes due.