PLAN FIRST Consult an attorney or CPA regarding the tax consequences of selling or exchanging your property. IPX cannot advise you regarding specific tax consequences.
RELINISHED CONTRACT Your sale contract should contain a #1031 cooperation clause. Once the contract is signed, open escrow and order a preliminary title report.
CONTACT IPX #1031 Prior to the close of escrow, forward your contract and title report to IPX.
DOCUMENTATION IPX will draft your exchange agreement and the assignment assigning us in as qualified intermediary seller. The documents will be sent to your escrow officer. You may request copies as well. The exchange documents must be signed prior to closing.
ESCROW CLOSES ON RELINQUISED PROPERTY A copy of the closing statement is sent to IPX along with exchange proceeds. The exchanger may withdraw cash from escrow, but those funds will be taxable boot. Funds sent to IPX are restricted for 45 days; and, if exchanger identifies replacement properties, for 180 days or until replacement property is acquired. The close of escrow starts the 45-day identification period and the 180-day exchange period.
IDENTIFICATION IPX provides exchangers with a form for identification. The identification must be in writing, signed by all exchangers and returned to us by midnight of the 45th day. The exchanger may also identify to other parties. We provide a copy of the regulations with the identification form. Although the exchanger is ultimately responsible for keeping track of the exchange timelines, IPX provides a courtesy notice.
REPLACEMENT CONTRACT Your replacement contract should also contain a #1031 cooperation clause. Again, when the contract is signed, open escrow and order a preliminary title report.
DOCUMENTATION Prior to closing escrow, send a copy of the contract and preliminary title report to IPX. We will draft the documents assigning us in as qualified intermediary purchaser. When the assignment is executed, IPX can send deposits required in the contract to the replacement escrow.
ESCROW CLOSES ON REPLACEMENT PROPERTY A copy of the estimated closing statement is sent to IPX along with a demand for exchange funds. IPX will wire transfer demanded funds to the closing escrow.
TAX DEFERRAL IPX is required to withhold and remit to the Franchise Tax Board 3 1/3% of any remaining proceeds before sending the balance to exchanger. Keep your final closing statements from both escrows for your tax preparer.
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