It is disadvantageous to an exchange transaction to agree to provide financing (the "seller carry-back") for the buyer; an "all cash to seller" offer provides the taxpayer with the maximum tax-deferral.
At the same time as you start to sell your Relinquished Property, you should also start (if you haven't already) looking for potential Replacement Properties.
Open your escrow, for the sale of the Relinquished Property, and inform the escrow company that you are going to do a Section 1031 exchange, and that IES will be acting as your Qualified Intermediary; do not hesitate to give them our contact information so that we can begin coordinating with them.
Complete the Phase I Datasheet online, or download and fax to IES at 415-782-5209.
Provide IES with a copy of the signed sale agreement with the buyer, and with the title company's preliminary title report it has prepared for the buyer. (If you advise us of the name and phone number of your real estate agent, or the name, phone number of the escrow agent, and the escrow/order number, we can coordinate getting those documents from your agents).
IES will then prepare the Exchange Agreement and the other documents to complete the exchange, and will give instructions to the escrow company so that it can close the sale of the Relinquished Property as PHASE I of the Section 1031 Exchange.
As soon as the sale is consummated, and we receive from the escrow agent both the Exchange Proceeds and the certified Settlement Statement, we will inform you of (a) the amount received, and (b) the date which is the end of your 45 day IDENTIFICATION PERIOD, and the date which is the end of your 180 day EXCHANGE PERIOD.
Sometimes, the escrow companies take weeks to get the closing statement to IES due to their backlog of work; it is imperative that you, also, record and keep track of the date when the sale transaction closed, and what date is 45 days later (including the date of closing) and what date is 180 days later (including the date of closing), so that you do not miss the deadlines. Our notice to you is as a courtesy reminder, only.
THE TIME DEADLINES, AND THE ACTS TO BE COMPLETED WITHIN THE TIME DEADLINES, MUST BE MET TO HAVE A VALID SECTION 1031 EXCHANGE. THERE ARE NO EXTENSION AVAILABLE EXCEPT FOR SITUATIONS SUCH AS A FEDERALLY-DECLARED DISASTER.
Identification of Potential Replacement Properties
The US Treasury Dept. (which includes the IRS) issues "Regulations" that inform how various tax laws are to be carried out. Under Section 1031, the Regulations describe the various ways, and time limitations, for "Identification".
The taxpayer can identify either: