<p>1031 exchanges are typically of the "forward" variety - they start when you sell an asset and then buy a replacement asset of like-kind. But more and more our clients are finding themselves in the position of needing to purchase a new asset before they sell their old one. Experienced exchangers know that the 45-day identification period for identifying new property is tight, and many investors want the opportunity to get their replacement property in place before they sell. Other clients may have both their sale and their purchase all lined up but at the last minute they lose their buyer and there goes the sale. Now they're ready to buy but can't sell. How can they still do an exchange?</p>

<p>The solution is a reverse exchange. In a reverse you can purchase your new property before you sell your old property and still get all the benefits of a 1031 like-kind exchange. The reverse 1031 exchange transaction is permitted under <a href="/sites/default/files/Rev%20Proc%202000-37_0.pdf" target="_blank">Revenue Procedure 2000-37</a>. &nbsp;Although reverse exchanges were taking place way before the year 2000, this RevProc gives us clear safe-harbor guidelines for this type of an exchange.</p>

<p><strong>This is how it works.</strong> The IRS will not let you hold title or ownership to both your new and your old property at the same time, but they will allow your Qualified Intermediary (QI) to take title to your new property for you until you can sell your old one. This is called "parking a property. " Your QI can do this by way of a single member LLC that's opened up specifically for your exchange. This LLC is called an Exchange Accommodation Titleholder, more commonly referred to as an EAT, and it does just what is says: it holds the title - that's it. The property is leased from the EAT to the taxpayer/exchanger. This allows the taxpayer/exchanger to have full access to the new property and to make money from that new property right away.</p>

<p>How does the EAT pay for the new property? Simple, they rely on the taxpayer. The taxpayer can buy with cash or get a lender. If a lender is used, it must be willing to have the EAT sign the security instrument for the loan, as they are going to be the owners of the new property. With a safe harbor reverse exchange an EAT does not necessarily have to be on the loan as a borrower, but if the bank insists, the EAT will be a non-recourse borrower with all recourse going to the taxpayer. Also, the taxpayer needs to be prepared to add the EAT to the insurance of the parked property.</p>

<p>So how do you know that the EAT will not sell your property to someone else while you're waiting to sell? Easy, a purchase option is always part of the Qualified Exchange Accommodation Agreement. That is the legal document that allows the exchanger and the EAT to move into a parking arrangement. This purchase option gives the exchanger the exclusive right to buy the replacement property from the EAT, and that is exactly what the exchanger will do right after they sell. The exchanger must take title to the new property from the EAT within 180 days after it is parked, and they must identify what they are selling within 45 days of parking.</p>

<p>It's really that easy. After the taxpayer sells the EAT will use the exchange proceeds to pay back the taxpayer what they owe them and give title of the asset to the taxpayer/exchanger. If this <em>does</em> still sound a little tricky to you, not to worry. Accruit has several reverse exchange experts who can address all your questions about a typical reverse as well as more complicated reverses (such as exchange first reverses, straddles, and improvement exchanges).</p>

<div style="float: right; padding: 0 10px 20px 10px; margin-left: 15px; width: 180px; font: 11px/1.1 Verdana, Arial, Helvetica, sans-serif; color: #000;">
<p><strong>These TIC purchases often require commercial bank lending. </strong>For a 100% tax deferred exchange, the exchanger needs to make sure that all of the net proceeds from the sale of their old property are utilized for the TIC purchase. Additionally, any mortgage debt paid off from the sale of their old property must be replaced. Many of the commercial lenders for these TIC purchases require the bank lending be made to a Delaware LLC entity. This creates the requirement for the 1031 exchanger to have a single member LLC for each party of the exchange.</p>

<p>&nbsp;</p>
</div>

<h1 style="background: white;"><span style="font-size:11.0pt"><span style="font-family:&quot;Calibri&quot;,sans-serif"><span style="color:#212529"><span style="font-weight:normal">Check out the following lending issues prior to your 1031 exchange transaction:</span></span></span></span></h1>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">1. Clean up the old property title by transferring it to your individual name. Mortgage portfolio lenders will not lend to living trusts, revocable trusts, partnerships, or limited liability companies. Remember that the IRS considers a single owner trust, a single member limited liability company or a husband and wife owned partnership as a disregarded entity. This means that you can transfer ownership back and forth with no federal tax effects and still obtain the mortgage lending. Be sure to check that you do not trigger a "due on sale clause" in your mortgage note when transferring such ownership back and forth.<o:p></o:p></span></h4>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">2. Mortgage lenders understand the purpose of a 1031 exchange – investment property purchase. Do not try to obtain 2nd home mortgage financing for a 1031 replacement property. The underwriters will not fund a loan if you misrepresent the use of the property.<o:p></o:p></span></h4>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">3. If proceeds from a mortgage loan cause an exchanger to receive cash at closing of the replacement property, the exchanger will incur a tax liability. Instead request to have your earnest money refunded or apply the excess as a principal reduction payment on the settlement statement to avoid capital gains tax.<o:p></o:p></span></h4>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">4. When participating in a reverse exchange do not utilize a residential mortgage lender who sells their loans to other investors. Only commercial banks will lend to a Limited Liability Company (LLC) which acts as the parking entity for a <a href="https://www.accruit.com/blog/infographic-10-steps-reverse-exchange&quot; title="reverse 1031 exchange">reverse exchange</a>. The commercial bank will want the exchanger to guarantee the loan or will tie up additional collateral the Exchanger may have. Some commercial banks are resistant to lending to the LLC entity which parks the replacement property for the exchanger. Other commercial banks look to the credit strength of the exchanger and will fund 90 to 100% of the purchase price. Generally, the lending is bridge type financing and can be interest only. Often reverse lending loans take more time to fund as there are additional requirements such as environmental reports, surveys, commercial appraisals, liability insurance and the loan committee approval process. Understanding the commercial bank requirements for a reverse parking loan will allow an exchanger to coordinate closing dates, allowing time for loan processing.<o:p></o:p></span></h4>

<h4 style="margin:0in;background:white"><span style="font-size:11.0pt;
font-family:&quot;Calibri&quot;,sans-serif;mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:
minor-latin;mso-bidi-theme-font:minor-latin;color:#212529;font-weight:normal">5. Many exchangers purchase replacement property in the form of Tenant- In-Common (TIC) percentage interests in large commercial or apartment complexes.<o:p></o:p></span></h4>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">6. Realize that mortgage lenders often cannot fund a loan on the day of closing. Occasionally, exchangers will coordinate simultaneous exchange closings at the same title company to save on exchange fees. Both the old property sale and the new property purchase must occur on the same day. If the buyer's mortgage lender does not fund their loan when the old property is sold, the sale is closed in escrow. The exchanger should not continue with the closing paperwork for the purchase of the new property without a qualified intermediary involved. The 1031 exchange will not be allowed by the IRS if the old property closes in escrow without the use of a <a href="https://www.accruit.com/qi-services&quot; title="qualified intermediary">qualified intermediary</a>.<o:p></o:p></span></h4>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">7. Be careful when you refinance to take money out of your old investment property. An exchanger should not obtain cash out refinance on their old property immediately before their 1031 exchange transaction. The IRS will not allow the <a href="https://www.accruit.com/property-owners/1031-exchange-explained&quot; title="1031 exchange">1031 exchange</a> if an exchanger cannot prove they used the cash proceeds to improve the old property. Remember that an exchanger can immediately refinance their new replacement property after the 1031 exchange transaction is complete and take cash out without any tax ramifications.<o:p></o:p></span></h4>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">For the savvy real estate investor, a 1031 exchange can defer taxes and generate more cash flow and appreciation potential. Part of the equation for higher cash flow is to structure the best possible mortgage loan. By planning, exchangers will obtain their investment goals with the flexible mortgage products available in the marketplace. Plan your next 1031 exchange with lending issues in mind! Please note that all material provided in this newsletter is for informational purposes only and the author is not providing legal, tax accounting or other professional services. The accuracy of the information provided as it pertains to your situation is not guaranteed.<o:p></o:p></span></h4>

<h4 style="margin:0in;background:white"><span style="font-size:11.0pt;
font-family:&quot;Calibri&quot;,sans-serif;mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:
minor-latin;mso-bidi-theme-font:minor-latin;color:#212529;font-weight:normal">Please seek professional consultation if legal, tax accounting or other expert assistance is required.</span></h4>

<h4 style="margin:0in;background:white"><span style="font-size:11.0pt;
font-family:&quot;Calibri&quot;,sans-serif;mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:
minor-latin;mso-bidi-theme-font:minor-latin;color:#212529;font-weight:normal"><o:p></o:p></span></h4>

<p>&nbsp;</p>

<p style="text-align:center"><a href="https://cta-redirect.hubspot.com/cta/redirect/6205670/914580be-98fb-4bc…; target="_blank"><img alt="Start Your 1031 Exchange with Accruit today" class="hs-cta-img" height="258" id="hs-cta-img-914580be-98fb-4bcd-896e-3085b6212867" src="https://no-cache.hubspot.com/cta/default/6205670/914580be-98fb-4bcd-896…; style="border-width:0px;" width="700" /></a></p>

<hr />
<div style="clear: both; height: 0; font-size: 1px; line-height: 0px;">&nbsp;</div>

<div style="padding: 10px; border: 1px solid #333; background: #393939;">
<p style="font: 9px/1.2 Verdana, Arial, Helvetica, sans-serif; color: #fff;">Please note that all material provided in this newsletter is for informational purposes only and the author is not providing legal, tax accounting or other professional services. The accuracy of the information provided as it pertains to your situation is not guaranteed. Please seek professional consultation if legal, tax accounting or other expert assistance is required.</p>
</div>
<!--HubSpot Call-to-Action Code -->

<div style="float: right; padding: 0 10px 20px 10px; margin-left: 15px; width: 180px; font: 11px/1.1 Verdana, Arial, Helvetica, sans-serif; color: #000;">
<p><strong>These TIC purchases often require commercial bank lending. </strong>For a 100% tax deferred exchange, the exchanger needs to make sure that all of the net proceeds from the sale of their old property are utilized for the TIC purchase. Additionally, any mortgage debt paid off from the sale of their old property must be replaced. Many of the commercial lenders for these TIC purchases require the bank lending be made to a Delaware LLC entity. This creates the requirement for the 1031 exchanger to have a single member LLC for each party of the exchange.</p>

<p>&nbsp;</p>
</div>

<h1 style="background: white;"><span style="font-size:11.0pt"><span style="font-family:&quot;Calibri&quot;,sans-serif"><span style="color:#212529"><span style="font-weight:normal">Check out the following lending issues prior to your 1031 exchange transaction:</span></span></span></span></h1>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">1. Clean up the old property title by transferring it to your individual name. Mortgage portfolio lenders will not lend to living trusts, revocable trusts, partnerships, or limited liability companies. Remember that the IRS considers a single owner trust, a single member limited liability company or a husband and wife owned partnership as a disregarded entity. This means that you can transfer ownership back and forth with no federal tax effects and still obtain the mortgage lending. Be sure to check that you do not trigger a "due on sale clause" in your mortgage note when transferring such ownership back and forth.<o:p></o:p></span></h4>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">2. Mortgage lenders understand the purpose of a 1031 exchange – investment property purchase. Do not try to obtain 2nd home mortgage financing for a 1031 replacement property. The underwriters will not fund a loan if you misrepresent the use of the property.<o:p></o:p></span></h4>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">3. If proceeds from a mortgage loan cause an exchanger to receive cash at closing of the replacement property, the exchanger will incur a tax liability. Instead request to have your earnest money refunded or apply the excess as a principal reduction payment on the settlement statement to avoid capital gains tax.<o:p></o:p></span></h4>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">4. When participating in a reverse exchange do not utilize a residential mortgage lender who sells their loans to other investors. Only commercial banks will lend to a Limited Liability Company (LLC) which acts as the parking entity for a <a href="https://www.accruit.com/blog/infographic-10-steps-reverse-exchange&quot; title="reverse 1031 exchange">reverse exchange</a>. The commercial bank will want the exchanger to guarantee the loan or will tie up additional collateral the Exchanger may have. Some commercial banks are resistant to lending to the LLC entity which parks the replacement property for the exchanger. Other commercial banks look to the credit strength of the exchanger and will fund 90 to 100% of the purchase price. Generally, the lending is bridge type financing and can be interest only. Often reverse lending loans take more time to fund as there are additional requirements such as environmental reports, surveys, commercial appraisals, liability insurance and the loan committee approval process. Understanding the commercial bank requirements for a reverse parking loan will allow an exchanger to coordinate closing dates, allowing time for loan processing.<o:p></o:p></span></h4>

<h4 style="margin:0in;background:white"><span style="font-size:11.0pt;
font-family:&quot;Calibri&quot;,sans-serif;mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:
minor-latin;mso-bidi-theme-font:minor-latin;color:#212529;font-weight:normal">5. Many exchangers purchase replacement property in the form of Tenant- In-Common (TIC) percentage interests in large commercial or apartment complexes.<o:p></o:p></span></h4>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">6. Realize that mortgage lenders often cannot fund a loan on the day of closing. Occasionally, exchangers will coordinate simultaneous exchange closings at the same title company to save on exchange fees. Both the old property sale and the new property purchase must occur on the same day. If the buyer's mortgage lender does not fund their loan when the old property is sold, the sale is closed in escrow. The exchanger should not continue with the closing paperwork for the purchase of the new property without a qualified intermediary involved. The 1031 exchange will not be allowed by the IRS if the old property closes in escrow without the use of a <a href="https://www.accruit.com/qi-services&quot; title="qualified intermediary">qualified intermediary</a>.<o:p></o:p></span></h4>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">7. Be careful when you refinance to take money out of your old investment property. An exchanger should not obtain cash out refinance on their old property immediately before their 1031 exchange transaction. The IRS will not allow the <a href="https://www.accruit.com/property-owners/1031-exchange-explained&quot; title="1031 exchange">1031 exchange</a> if an exchanger cannot prove they used the cash proceeds to improve the old property. Remember that an exchanger can immediately refinance their new replacement property after the 1031 exchange transaction is complete and take cash out without any tax ramifications.<o:p></o:p></span></h4>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">For the savvy real estate investor, a 1031 exchange can defer taxes and generate more cash flow and appreciation potential. Part of the equation for higher cash flow is to structure the best possible mortgage loan. By planning, exchangers will obtain their investment goals with the flexible mortgage products available in the marketplace. Plan your next 1031 exchange with lending issues in mind! Please note that all material provided in this newsletter is for informational purposes only and the author is not providing legal, tax accounting or other professional services. The accuracy of the information provided as it pertains to your situation is not guaranteed.<o:p></o:p></span></h4>

<h4 style="margin:0in;background:white"><span style="font-size:11.0pt;
font-family:&quot;Calibri&quot;,sans-serif;mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:
minor-latin;mso-bidi-theme-font:minor-latin;color:#212529;font-weight:normal">Please seek professional consultation if legal, tax accounting or other expert assistance is required.</span></h4>

<h4 style="margin:0in;background:white"><span style="font-size:11.0pt;
font-family:&quot;Calibri&quot;,sans-serif;mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:
minor-latin;mso-bidi-theme-font:minor-latin;color:#212529;font-weight:normal"><o:p></o:p></span></h4>

<p>&nbsp;</p>

<p style="text-align:center"><a href="https://cta-redirect.hubspot.com/cta/redirect/6205670/914580be-98fb-4bc…; target="_blank"><img alt="Start Your 1031 Exchange with Accruit today" class="hs-cta-img" height="258" id="hs-cta-img-914580be-98fb-4bcd-896e-3085b6212867" src="https://no-cache.hubspot.com/cta/default/6205670/914580be-98fb-4bcd-896…; style="border-width:0px;" width="700" /></a></p>

<hr />
<div style="clear: both; height: 0; font-size: 1px; line-height: 0px;">&nbsp;</div>

<div style="padding: 10px; border: 1px solid #333; background: #393939;">
<p style="font: 9px/1.2 Verdana, Arial, Helvetica, sans-serif; color: #fff;">Please note that all material provided in this newsletter is for informational purposes only and the author is not providing legal, tax accounting or other professional services. The accuracy of the information provided as it pertains to your situation is not guaranteed. Please seek professional consultation if legal, tax accounting or other expert assistance is required.</p>
</div>
<!--HubSpot Call-to-Action Code -->

<div style="float: right; padding: 0 10px 20px 10px; margin-left: 15px; width: 180px; font: 11px/1.1 Verdana, Arial, Helvetica, sans-serif; color: #000;">
<p><strong>These TIC purchases often require commercial bank lending. </strong>For a 100% tax deferred exchange, the exchanger needs to make sure that all of the net proceeds from the sale of their old property are utilized for the TIC purchase. Additionally, any mortgage debt paid off from the sale of their old property must be replaced. Many of the commercial lenders for these TIC purchases require the bank lending be made to a Delaware LLC entity. This creates the requirement for the 1031 exchanger to have a single member LLC for each party of the exchange.</p>

<p>&nbsp;</p>
</div>

<h1 style="background: white;"><span style="font-size:11.0pt"><span style="font-family:&quot;Calibri&quot;,sans-serif"><span style="color:#212529"><span style="font-weight:normal">Check out the following lending issues prior to your 1031 exchange transaction:</span></span></span></span></h1>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">1. Clean up the old property title by transferring it to your individual name. Mortgage portfolio lenders will not lend to living trusts, revocable trusts, partnerships, or limited liability companies. Remember that the IRS considers a single owner trust, a single member limited liability company or a husband and wife owned partnership as a disregarded entity. This means that you can transfer ownership back and forth with no federal tax effects and still obtain the mortgage lending. Be sure to check that you do not trigger a "due on sale clause" in your mortgage note when transferring such ownership back and forth.<o:p></o:p></span></h4>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">2. Mortgage lenders understand the purpose of a 1031 exchange – investment property purchase. Do not try to obtain 2nd home mortgage financing for a 1031 replacement property. The underwriters will not fund a loan if you misrepresent the use of the property.<o:p></o:p></span></h4>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">3. If proceeds from a mortgage loan cause an exchanger to receive cash at closing of the replacement property, the exchanger will incur a tax liability. Instead request to have your earnest money refunded or apply the excess as a principal reduction payment on the settlement statement to avoid capital gains tax.<o:p></o:p></span></h4>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">4. When participating in a reverse exchange do not utilize a residential mortgage lender who sells their loans to other investors. Only commercial banks will lend to a Limited Liability Company (LLC) which acts as the parking entity for a <a href="https://www.accruit.com/blog/infographic-10-steps-reverse-exchange&quot; title="reverse 1031 exchange">reverse exchange</a>. The commercial bank will want the exchanger to guarantee the loan or will tie up additional collateral the Exchanger may have. Some commercial banks are resistant to lending to the LLC entity which parks the replacement property for the exchanger. Other commercial banks look to the credit strength of the exchanger and will fund 90 to 100% of the purchase price. Generally, the lending is bridge type financing and can be interest only. Often reverse lending loans take more time to fund as there are additional requirements such as environmental reports, surveys, commercial appraisals, liability insurance and the loan committee approval process. Understanding the commercial bank requirements for a reverse parking loan will allow an exchanger to coordinate closing dates, allowing time for loan processing.<o:p></o:p></span></h4>

<h4 style="margin:0in;background:white"><span style="font-size:11.0pt;
font-family:&quot;Calibri&quot;,sans-serif;mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:
minor-latin;mso-bidi-theme-font:minor-latin;color:#212529;font-weight:normal">5. Many exchangers purchase replacement property in the form of Tenant- In-Common (TIC) percentage interests in large commercial or apartment complexes.<o:p></o:p></span></h4>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">6. Realize that mortgage lenders often cannot fund a loan on the day of closing. Occasionally, exchangers will coordinate simultaneous exchange closings at the same title company to save on exchange fees. Both the old property sale and the new property purchase must occur on the same day. If the buyer's mortgage lender does not fund their loan when the old property is sold, the sale is closed in escrow. The exchanger should not continue with the closing paperwork for the purchase of the new property without a qualified intermediary involved. The 1031 exchange will not be allowed by the IRS if the old property closes in escrow without the use of a <a href="https://www.accruit.com/qi-services&quot; title="qualified intermediary">qualified intermediary</a>.<o:p></o:p></span></h4>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">7. Be careful when you refinance to take money out of your old investment property. An exchanger should not obtain cash out refinance on their old property immediately before their 1031 exchange transaction. The IRS will not allow the <a href="https://www.accruit.com/property-owners/1031-exchange-explained&quot; title="1031 exchange">1031 exchange</a> if an exchanger cannot prove they used the cash proceeds to improve the old property. Remember that an exchanger can immediately refinance their new replacement property after the 1031 exchange transaction is complete and take cash out without any tax ramifications.<o:p></o:p></span></h4>

<h4 style="background:white"><span style="font-size:11.0pt;font-family:&quot;Calibri&quot;,sans-serif;
mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-theme-font:
minor-latin;color:#212529;font-weight:normal">For the savvy real estate investor, a 1031 exchange can defer taxes and generate more cash flow and appreciation potential. Part of the equation for higher cash flow is to structure the best possible mortgage loan. By planning, exchangers will obtain their investment goals with the flexible mortgage products available in the marketplace. Plan your next 1031 exchange with lending issues in mind! Please note that all material provided in this newsletter is for informational purposes only and the author is not providing legal, tax accounting or other professional services. The accuracy of the information provided as it pertains to your situation is not guaranteed.<o:p></o:p></span></h4>

<h4 style="margin:0in;background:white"><span style="font-size:11.0pt;
font-family:&quot;Calibri&quot;,sans-serif;mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:
minor-latin;mso-bidi-theme-font:minor-latin;color:#212529;font-weight:normal">Please seek professional consultation if legal, tax accounting or other expert assistance is required.</span></h4>

<h4 style="margin:0in;background:white"><span style="font-size:11.0pt;
font-family:&quot;Calibri&quot;,sans-serif;mso-ascii-theme-font:minor-latin;mso-hansi-theme-font:
minor-latin;mso-bidi-theme-font:minor-latin;color:#212529;font-weight:normal"><o:p></o:p></span></h4>

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<p style="text-align:center"><a href="https://cta-redirect.hubspot.com/cta/redirect/6205670/914580be-98fb-4bc…; target="_blank"><img alt="Start Your 1031 Exchange with Accruit today" class="hs-cta-img" height="258" id="hs-cta-img-914580be-98fb-4bcd-896e-3085b6212867" src="https://no-cache.hubspot.com/cta/default/6205670/914580be-98fb-4bcd-896…; style="border-width:0px;" width="700" /></a></p>

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<p style="font: 9px/1.2 Verdana, Arial, Helvetica, sans-serif; color: #fff;">Please note that all material provided in this newsletter is for informational purposes only and the author is not providing legal, tax accounting or other professional services. The accuracy of the information provided as it pertains to your situation is not guaranteed. Please seek professional consultation if legal, tax accounting or other expert assistance is required.</p>
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