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Section 1031 of the Internal Revenue Code provides for the tax deferred exchange of property. While not every piece of real estate is eligible for tax deferrment under a 1031 exchange, many are and real estate investors should have an understanding of how a 1031 Exchange can help defer significant amounts of capital gains tax when they desire to relinquish a piece of property they own and replace it with another.

Forward 1031 Exchanges

While not as complex or costly as a Reverse 1031 Exchange the Forward 1031 Exchange is still a complex transaction. In a Forward 1031 Exchange the exchangor relinquishes the property they own to a buyer and then either simultaneously or within 180 days closes escrow on their replacement property. In most cases a Qualified Intermediary is required in order to maintain the tax deferred status of the exchange. Forward 1031 Exchanges occur under three different circumstances that are listed below. The Seascape Financial Group can provide financing for the buyer of the relinquished property or the exchangor purchasing their replacement property.

• Two Party Exchange without a qualified intermediary
• Simultaneous exchange with a qualified intermediary
• Deferred exchange with a qualified intermediary

Reverse 1031 Exchanges

A Reverse 1031 Exchange is any 1031 Exchange where the exchangor has found a replacement property and must close escrow on the replacement property prior to closing escrow on the property they are relinquishing. Reverse Exchanges require the services of an Exchange Accommodation Titleholder who will hold title to the parked property until the exchange is complete. Often the Exchange Accommodation Titleholder forms a separate entity in order to hold title to the parked property. Providing financing to the buyer of the parked property or the entity formed by the Exchange Accommodation Titleholder in order to hold title to the parked property is the role of the Seascape Financial Group. There are two scenrios under which a Reverse 1031 Exchange can take place, they are listed below, the Seascape Financial Group can provide funding for either type of scenario.

• Relinquished property parked
• Replacement property parked

Transaction Support

Working with the right people is important in any real estate transaction, it is absolutely vital in a 1031 Exchange. Whether your transaction is a forward exchange or a reverse exchange, it will require a high degree of skill in a number of disciplines in order to complete the exchange in such a way that none of the 1031 Exchange rules are violated. The services listed below are all essential aspects of a 1031 Exchange and are provided by experts with whom the Seascape Financial Group has cultivated relationships in order to ensure the success of your 1031 Exchange.

• Title insurance
• Escrow
• Appraisal
• Qualified intermediary services
• Exchange accommodation titleholder services
• Legal services
• Accounting & tax services