How to Select the Best 1031 Qualified Intermediary
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 some few considerations when you are choosing a 1031 exchange accommodator.
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. The accommodator should have the necessary experience required to handle 1031 exchange properties for sale including the most difficult ones. Ask how many exchanges they have completed in the past five years and this will help you determine if they are a reliable choice. When you work with an experienced firm, you will have peace of mind because they will guarantee you quality services and help you understand the whole process.
You can evaluate the experience and performance of the company you are considering by asking 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. With this information, you will be able to establish if they are right for you and your business.
Before choosing a qualified intermediary for your 1031 exchange, you need to ask where your exchange funds will be held. The facilitators should have various reliable options for holding 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 A safer option is to insist for the funds to be kept in a segregated qualified trust to ensure that no money can be withdrawn without yor authorization.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.
You should make sure you are dealing with a firm that always conducts a pre-employment screening on its employees as a measure to secure your funds. 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.
Request for a copy of the insurance coverage and verify that the qualified intermediary has adequate fidelity bond insurance coverage. 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. You can also check if they have membership with any professional associations for facilitators as this shows that they are qualified to provide you with the most secure exchanges.