GREATER BOSTON EXCHANGE COMPANY, LLC is owned and operated by attorneys with over 50 years of combined experience in real estate and tax law. GBEC provides Qualified Intermediary services and consulting services to real estate owners and plans and structures Internal Revenue Code § 1031 tax-deferred exchanges.
A 1031 tax-deferred exchange is a method allowed by Internal Revenue Code (IRC) § 1031, whereby an owner of certain investment or business property may defer paying capital gains taxes on the sale of such property if the owner acquires "like-kind" property within a certain period of time.
All real estate held for investment or business purposes may be considered "like-kind" to any other real estate held for investment or business purposes. For example, raw land can be exchanged for an apartment building. The Exchanger must be able to demonstrate that both the property being sold (the "Relinquished Property") and the property being purchased (the "Replacement Property") are held for business or investment purposes.
Note that stocks, bonds, partnership or LLC interests, personal residences, or inventory do not qualify as like-kind property.
The Exchanger assigns his interest in the P&S Agreement to the Qualified Intermediary. The Qualified Intermediary receives the net sale proceeds so that the Exchanger does not have actual or constructive receipt of the funds. The Qualified Intermediary holds the net sale proceeds until they are needed for the close of the Replacement Property.