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The Steps Simply stated, the steps to complete a 1031 Exchange are as follows:
- Relinquished property is sold through an escrow and Exchanger's proceeds are forwarded to Accomodator/Facilitator (All About Exchanges, item 5) Funds are held in a separate account for each individual transaction.
- Exchanger identifies upleg properties (All About Exchanges, item 5)
- Enter into an agreement and escrow to purchase upleg property. The purchase agreement should include a provision requiring the seller to assist in completing the exchange.
As stated, these are the basic steps for an exchange. Dedpending on the type of exchange, (All About Exchanges, item 6), there will be additional and/or different steps to complete the process.
It is always best to consult with your legal and/or tax advisor for accurate explanations of these issues.
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