1031 Exchange
Explained

Many investors assume that completing a 1031 Exchange is complex or intimidating. In reality, the process is straightforward when the proper steps are followed.

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1. Open Your Exchange Account

Your 1031 Exchange account must be established before the close of escrow on the property being sold. While it’s best not to wait until the last minute, Asset Exchange Company (AEC) can open a rush account if needed.

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2. Add 1031 Language to the Sales Contract

The Purchase and Sale Agreement for the property being sold should include the appropriate 1031 Exchange clause. AEC can provide sample language upon request.

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3. Execute the Exchange Agreement

At closing, AEC coordinates with the escrow company to secure all required signatures and finalize the exchange documentation.

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5. Submit the 45-Day Identification Letter

All replacement properties must be identified in writing by day 45 in an unambiguous manner. AEC will guide you through the proper format and submission.

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6. Request Funds for Deposits

Exchange funds can be used for earnest money deposits by submitting a Disbursement Form to AEC indicating the amount and recipient. Deposits made from personal funds can later be reimbursed at closing.

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7. Complete the Exchange and Final Signatures

At the closing of the replacement property, AEC works with escrow to obtain all necessary signatures and ensure all IRS requirements are met. Depending on the transaction, additional steps may apply, and AEC will assist throughout to ensure a smooth, compliant exchange.