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EXECUTE EXCHANGE DOCUMENTS: Exchanger must sign all exchange documents and the seller of the replacement property must sign the assignment agreement. Executed documents must be sent to Legal 1031 prior to the closing.
Handling the closing of a 1031 tax deferred exchange is almost as easy as closing a typical sale transaction! The main difference, though, is the documentation provided by 1031 Exchange Place. These documents are paramount to a successful 1031 exchange and must be executed prior to the relinquished property closing.
Legal 1031 will ask you to send a copy of your relinquished contract or purchase and sale agreement and use the information in the contract to prepare the exchange documents. In order to have a valid exchange the QI must assign into your purchase agreement.
Property that does not qualify includes but is not limited to a primary residence, a second home, flip properties, or a property held in inventory for sale. Recent changes to tax law disallow personal property (artwork, boats, etc.) as valid property in a 1031 Exchange at the federal level.
Seller acknowledges that it is the intention of the Buyer to acquire property as part of a tax-deferred exchange under Internal Revenue Code Section 1031. Seller agrees to cooperate as long as it does not delay the closing or cause additional expense to the Seller.

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The Exchange Closing Instructions should be signed by you as the escrow officer, closing or settlement agent prior to closing. This document provides you with the necessary instructions to ensure the tax-deferred exchange documents have been processed and distributed correctly.
The taxpayer and the related party must hold the properties that each received as part of the 1031 Exchange transaction for a minimum of two (2) years. The two (2) year holding period starts running on the date of the transfer or conveyance of the last property involved in the 1031 Exchange related party transaction.

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