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IRS Announces Tax Relief for Tennessee and Arkansas Taxpayers Impacted by Severe Storms

04/14/25

In response to the destruction caused by severe storms, straight-line winds, tornadoes and flooding, the IRS has announced extended tax ...

Authored by: meredithb@accruit.com

Authored on: Mon, 04/14/2025 - 14:45

Company and Industry News

<h3 paraeid="{89b384a6-5521-41e7-a220-e57e6779373d}{185}" paraid="760886701">Due to severe storms, straight-line winds, tornadoes and flooding that occured in early April, the IRS has issued Tax Relief for the entire states of Tennessee of Arkansas. </h3>

Affected Taxpayers have until November 3, 2025, to make tax payments and file for various individual and business tax returns.

Currently, all individuals and households that reside in or have a business within the entire states of Tennessee and Arkansas qualify for tax relief. Any area added to the disaster area at a later time will also qualify for tax relief.

Who is an "Affected Taxpayer"?

An “Affected Taxpayer” includes individuals who live, and businesses whose principal place of business is in the Covered Disaster Area. Affected Taxpayers are entitled to relief regardless of where the Relinquished Property or Replacement Property is located. Affected Taxpayers may choose either the General Postponement relief under Section 6 OR the Alternative relief under Section 17 of Rev. Proc. 2018-58. Taxpayers who do not meet the definition of Affected Taxpayers do not qualify for Section 6 General Postponement relief.

Relief Specific to 1031 Exchanges for Affected Taxpayers

General Postponement under Section 6 of Rev. Proc. 2018-58 under Section 6 of Rev. Proc. 2018-58 (Affected Taxpayers only). Any 45-day deadline or 180-day deadline (for either a forward or reverse exchange) that falls on or after the Disaster Date above is postponed to the General Postponement Date. The General Postponement applies regardless of the date the Relinquished Property was transferred (or the parked property acquired by the EAT) and is available to Affected Taxpayers regardless of whether their exchange began before or after the Disaster Date.

Relief for Taxpayers with Related Difficulties

Section 17 Alternative (Available to (1) Affected Taxpayers and (2) other Taxpayers who have difficulty meeting the exchange deadlines because of the disaster. See Rev. Proc. 2018-58, Section 17 for conditions constituting “difficulty”). Option Two is only available if the Relinquished Property was transferred (or the parked property was acquired by the EAT) on or before the Disaster Date. Any 45-day or 180-day deadline that falls on or after the Disaster Date is extended to THE LONGER OF: (1) 120 days from such deadline; OR (2) the General Postponement Date. Note the date may not be extended beyond one year or the due date (including extensions) of the tax return for the year of the disposition of the Relinquished Property (typically, if an extension was filed, 9/15 for corporations and partnerships and 10/15 for other Taxpayers).

The material in this blog is presented for informational purposes only. The information presented is not investment, legal, tax or compliance advice. Accruit performs the duties of a Qualified Intermediary, and as such does not offer or sell investments or provide investment, legal, or tax advice.

Mon, 04/14/2025 - 20:19

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Considerations for No Fee 1031 Exchanges

04/08/25

While the idea of getting something for nothing may sound enticing, it isn’t reality in most situations, and 1031 Exchanges ...

Authored by: meredithb@accruit.com

Authored on: Tue, 04/08/2025 - 08:00

1031 Exchange General

While the prospect of getting something for nothing is appealing, it isn’t reality in most situations - there is no exception when it comes to 1031 Exchanges. A 1031 Exchange by design is a tax deferral strategy, not an investment vehicle. The goal of a 1031 Exchange is to achieve tax deferral on qualifying real estate transactions, in turn increasing cash flow and reinvestment potential, which, over time, compounds into greater returns on investments.

While the traditional 1031 Exchange Qualified Intermediary model calls for an initial 1031 Exchange fee, there are good reasons, as we will address in this article.

<h2 aria-level="2" paraeid="{fd7010d0-3cd7-4da7-8eb2-83f6f3dc0b17}{217}" paraid="752992213" role="heading">Role of a Qualified Intermediary  </h2>

The role of a Qualified Intermediary (QI) is to facilitate an exchange by stepping into the shoes of the parties, so the transaction is not merely a sale followed in time with a purchase, but an actual exchange of one property for the other. As such, the main goal of a Qualified Intermediary is to help an Exchanger achieve tax deferral with a successful exchange by adhering to the rules and regulations set forth in the subject <a href="https://www.accruit.com/sites/default/files/Internal%20Revenue%20Servic… Regulations</a>. These rules are detailed and complicated to navigate. Therefore, it should be of no importance to the QI how long it takes an Exchanger to identify and acquired the Replacement Property, so long as it falls within the allowed time frame. However, a Qualified Intermediary with no initial exchange fee is reliant on exchange funds sitting as close to the 180-day exchange period deadline or past, as they only revenue from during the time they hold an Exchanger’s exchange funds.

For a QI to only receive monetary compensation based upon the time they are holding Exchange Funds, poses the question of whether that sole revenue stream is enough to maintain operational controls to protect your investment. And is there the right economic incentive to ensure you receive the ongoing service post exchange if funds were only held for a very short duration.

<h2 aria-level="2" paraeid="{fd7010d0-3cd7-4da7-8eb2-83f6f3dc0b17}{249}" paraid="1550862202" role="heading">The Cost of a 1031 Exchange  </h2>

As with most other professional services, there is a fee for services rendered. For a 1031 Exchange, the initial fee to start your 1031 Exchange covers a multitude of aspects including:

<h3 aria-level="3" paraeid="{cc35f2d7-c953-4152-a4c4-b39895dc5665}{10}" paraid="612556917" role="heading">Specialized 1031 Experts  </h3>

“You get what you pay for,” is a widely known saying for a reason – it is true. As a QI looking to provide the utmost service to its clients, there is often staff consisting of highly credentialed personnel including specialized 1031 attorneys, CPAs, and Certified Exchange Specialists®. While these persons do not provide legal or tax advice their depth of experience can be invaluable.

<h3 aria-level="3" paraeid="{cc35f2d7-c953-4152-a4c4-b39895dc5665}{24}" paraid="460824067" role="heading">Segregation of Duties </h3>

Reputable QIs are staffed to scale, they have numerous team members that specialize in specific areas of a 1031 Exchange to ensure accuracy, prevent mistakes, and maintain accountability. Internal controls are set up to protect the Exchanger’s Personal Identifiable Information (PII), as well as create efficient processes that are not dependent on any one specific team member.

<h3 aria-level="3" paraeid="{cc35f2d7-c953-4152-a4c4-b39895dc5665}{36}" paraid="575730818" role="heading">Industry Leading Technology </h3>

There is software available within the industry including patented 1031 Exchange workflow technology, Exchange Manager ProSM, utilized to date by over 30 national QIs, including the nation’s third largest publicly traded QI. Exchange Manager ProSM includes SOC 2 Type II compliance, secure data storage through Microsoft Azure, and automated document creation and deadline notifications reducing potential for human error and helping maintain compliance with IRC §1031. These technologies are costly but provide benefit to the Exchanger and the QI.

While the prospect of a no cost 1031 Exchange, might be seem appealing at first glance, decades of experience has taught us that when a significant portion of someone’s wealth is at play, they prefer to pay a nominal fee for security and confidence in the QI.

<h2 aria-level="2" paraeid="{cc35f2d7-c953-4152-a4c4-b39895dc5665}{90}" paraid="1785077012" role="heading">Security and Liquidity of Exchange Funds </h2>

A secondary role of the QI is to hold exchange funds to avoid actual or constructive receipt by the Exchanger. It is important for the QI to maintain coverages and follows specific guidelines to ensure the safety and security of Exchange Funds. Some of the standard guidelines followed by trustworthy QIs include:

<ul role="list">
<li paraeid="{cc35f2d7-c953-4152-a4c4-b39895dc5665}{106}" paraid="72808933">Holding funds in segregated banks accounts </li>
<li paraeid="{cc35f2d7-c953-4152-a4c4-b39895dc5665}{106}" paraid="72808933">Maintaining adequate coverages for a fidelity bond, errors & omissions policy, and cyber liability policy   </li>
</ul>

Some additional measures taken by only the leading QIs, that are of absolutely importance to the integrity of the exchange and safety of the exchange funds include:

<ul role="list">
<li paraeid="{cc35f2d7-c953-4152-a4c4-b39895dc5665}{128}" paraid="1729426366">Utilizing only 4- and 5-star Bauer rated depository banks </li>
<li paraeid="{cc35f2d7-c953-4152-a4c4-b39895dc5665}{128}" paraid="1729426366">Segregated accounts opened under the Exchanger’s SSN or EIN to ensure that should the QI file for bankruptcy it is abundantly clear the funds are not that of the company, but of the individual Exchanger  </li>
<li paraeid="{cc35f2d7-c953-4152-a4c4-b39895dc5665}{128}" paraid="1729426366">Exchange funds held in liquid, demand deposit accounts, available for client direction of acquisition for Replacement Property at any time  </li>
<li paraeid="{cc35f2d7-c953-4152-a4c4-b39895dc5665}{128}" paraid="1729426366">Controls against Exchange disbursement directions being submitted fraudulently </li>
<li paraeid="{cc35f2d7-c953-4152-a4c4-b39895dc5665}{128}" paraid="1729426366">Dual authorization and verbally confirmed wire instructions </li>
</ul>

Following a traditional fee for service model, the QI is motivated only to focus on facilitating a successful tax deferral, with little regard for the duration they are holding your exchange funds. In this model, an Exchanger can rest assured their exchange funds are being held in their best interest with less of an incentive to reach for revenue by potentially putting Exchanger funds at risk.

For over 100 years, since 1921, 1031 Exchange have been in the US Tax Code with the role of the QI being introduced in the 1991 Regulations. Since that time, the general business model has included an initial fee to start a 1031 Exchange with the ultimate goal of the QI helping achieve tax deferral for the Exchanger.

Aggregated industry data for 2024 shows that for a standard forward exchange, the exchange fee is nominal, roughly just .05% of the average Relinquished Property Contract Price per exchange. For real estate investors that may have anywhere from 10-50% of their total wealth tied up in real estate investment, that exchange fee is well worth the assurance that their 1031 Exchange is in capable hands, with measures to protect the overall integrity of the exchange, and their exchange funds.

Accruit, as a Fiduciary for exchange funds, has an obligation, above all, to maintain the safety and liquidity of funds held for the benefit of an Exchanger. As mentioned above, a 1031 Exchange is a valuable long-term tax deferral vehicle and not an investment vehicle for the funds being held by the QI during the exchange transaction. As such, Accruit encourages all Exchangers to complete their own due diligence, ask questions, and ensure they are comfortable with all of the answers before they engage the services of any QI.

The material in this blog is presented for informational purposes only. The information presented is not investment, legal, tax or compliance advice. Accruit performs the duties of a Qualified Intermediary, and as such does not offer or sell investments or provide investment, legal, or tax advice.

Tue, 04/08/2025 - 14:56

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Partial 1031 Exchanges: Cashing Out a Portion of the Sale Proceeds

04/01/25

To fully defer associated taxes in a 1031 Exchange, Exchangers must exchange up or equal in value by reinvesting net equity ...

Authored by: meredithb@accruit.com

Authored on: Tue, 04/01/2025 - 12:00

1031 Exchange General

It is a fundamental principle that Exchangers should exchange equal or up in value to fully defer the relevant taxes in a 1031 Exchange. To put it another way, an Exchanger needs to reinvest the net equity and incur equal or greater debt, if any, compared to what was paid off at closing. What happens when an Exchanger wishes to cash out a portion of their proceeds instead? This blog will explore the implications of retaining some cash and not reinvesting that portion of the exchange proceeds, and a potential alternative.

<h2 aria-level="2" paraeid="{1a676225-0e8f-40ad-b151-7c2906d2db6b}{192}" paraid="1270735368" role="heading">1031 Exchange Basics </h2>

A key requirement for Exchangers is that they must adhere to the 45-day identification and 180-day exchange timelines. Second, all property must fit the qualified use requirements of IRC §1031, in that property must be “held for productive use in a trade or business or for investment”. Third, as per above, to fully defer all of the applicable taxes, the Exchanger must exchange into Replacement Property(ies) equal or greater in value to the Relinquished Property and utilize all of the equity from the disposition of the Relinquished Property, which is sometimes referenced as ‘trade equal or up in value and equal or up in equity’.

While full deferral requires meeting these reinvestment rules, it is possible to replace debt paid off with fresh cash brought into the replacement property acquisition.  However, it is not possible to replace net cash from the sale with excess debt on the purchase.

<h2 aria-level="2" paraeid="{1a676225-0e8f-40ad-b151-7c2906d2db6b}{220}" paraid="1526171020" role="heading">Exchanging Down </h2>

Sometimes, however, an Exchanger may determine that they wish to withhold a portion of the exchange proceeds to pay down other debts, pursue other business opportunities, or to be used for other personal reasons. For example, we have seen Exchangers keep money out of the exchange so that they can buy a new car, a vacation, or for their children’s college education. Alternatively, some Exchangers have difficulty finding property(ies) that meet their investment criteria, coming up short on their reinvestments. Perhaps they were seeking to diversify from the sale of one large property into several smaller ones, and they either couldn’t find enough appropriate properties or one of them fell through.

Additionally, some Exchangers dispose of Relinquished Property that had some debt and choose to acquire Replacement Property with no debt. These Exchangers may be reinvesting all of the exchange proceeds (i.e. equity), but they are not exchanging up in value.

Finally, some Exchangers have been misadvised that they must only reinvest the capital gains only, and that they can withdraw their initial investment at the time of the sale. As discussed above, this is simply not true.

In any of these scenarios, these Exchangers have found themselves in the position where they are not fully reinvesting the exchange value or the exchange funds. The amount that is not being reinvested is commonly referred to as <a href="https://www.accruit.com/blog/what-boot-1031-exchange">“boot”</a>.

<h3 aria-level="3" paraeid="{e37a3515-c5cf-4750-b9e9-a7534db17a14}{36}" paraid="1721038848" role="heading">Effects of Exchanging Down </h3>

Regardless of the reason, Exchangers who exchange down in value or equity face a likely taxable event at the end of the year. It is a ‘likely taxable’ event because they may have passive activity losses or other offsets that can be applied to the funds that are not reinvested. This is a good reason why a savvy Exchanger will include their tax and legal advisors in the planning and execution of their 1031 Exchange.

Exchangers who have boot in their exchange may be subject to capital gains, <a href="https://www.accruit.com/blog/what-depreciation-recapture-tax">depreciat… recapture</a>, state, and net investment income taxes on the boot. Capital gains, state, and <a href="https://www.accruit.com/blog/what-net-investment-income-tax">net investment income (NIIT) taxes</a> vary based on the Exchanger’s federal income tax bracket and state of residency, while depreciation recapture is 25%, regardless of the Exchanger’s tax bracket.

Let’s look at a couple of possible scenarios to further illustrate Exchanging Down in Value:

<h4 aria-level="4" paraeid="{e37a3515-c5cf-4750-b9e9-a7534db17a14}{111}" paraid="1277231546" role="heading">Scenario 1 </h4>

Exchanger disposes of a multi-family property for $1 million, on which they have $200,000 in appreciation (i.e. capital gains), and they have taken $100,000 in depreciation during the time they owned the property. This Exchanger now acquires a Replacement Property for $800,000, leaving $300,000 exposed to taxation. The first $100,000 will be treated as depreciation recapture and taxed at 25%. The remaining $200,000 will be treated as capital gains, taxed at 20% for this particular individual. Adding the NIIT and a five percent state tax, the net taxable event for this Exchanger will be $82,600, due when they file their tax return for the year of the sale.

<h4 aria-level="4" paraeid="{e37a3515-c5cf-4750-b9e9-a7534db17a14}{127}" paraid="851416411" role="heading">Scenario 2 </h4>

Exchanger disposes of raw land for $1 million, which they had acquired for $700,000, resulting in $300,000 in capital gains. Exchanger has determined that they would like to retain $100,000 of the proceeds at the closing table to invest in non-real estate investments. That $100,000 will not be part of the 1031 Exchange, it is considered boot and subject to capital gains, state and NIIT taxes.

<h2 aria-level="2" paraeid="{e37a3515-c5cf-4750-b9e9-a7534db17a14}{141}" paraid="571320494" role="heading">Possible Solutions </h2>

If our first Exchanger was unable to identify suitable property(ies) and they were not interested in a Delaware Statutory Trust (DST) (<a href="https://www.accruit.com/blog/delaware-statutory-trusts-1031-exchange-in…; rel="noreferrer noopener" target="_blank">1031 Exchange and Delaware Statutory Trusts</a>) or other passive real estate investments, there isn’t much that can be done to mitigate the taxable impact of their transaction.

Our second Exchanger has a clear alternative strategy. Rather than withdrawing the $100,000 at the sale of the Relinquished Property, this Exchanger could reinvest the entire amount into a Replacement Property and thereafter refinance the property to withdraw the $100,000. For most Exchangers, as long as the refinancing the Replacement Property is not part of an integrated plan with the purchase of the property, it should be a non-taxable event, allowing the second Exchanger to meet the goals of diversifying their investments while still executing a full 1031 Exchange. However, for partnerships, “debt-financed distributions” can be taxable, so it is essential to consider the specific tax implications before pursuing this strategy

As mentioned previously, Exchangers are encouraged to consult with their tax and legal advisors before and during the 1031 Exchange process, a Qualified Intermediary does not have access to the Exchanger’s full tax situation and, in any event, cannot provide tax or legal advice.

The material in this blog is presented for informational purposes only. The information presented is not investment, legal, tax or compliance advice. Accruit performs the duties of a Qualified Intermediary, and as such does not offer or sell investments or provide investment, legal, or tax advice.

Tue, 04/01/2025 - 13:57

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Celebrating 25 Years of Accruit: A Journey of Transformation and Growth

03/24/25

As Accruit celebrates its 25th anniversary, we reflect on our evolution and growth. Under the leadership of Brent Abrahm, the ...

Authored by: meredithb@accruit.com

Authored on: Mon, 03/24/2025 - 11:00

Company and Industry News

Accruit is proud to celebrate its 25th anniversary this month, marking a time for reflection, excitement, and anticipation for the future. Over the years, Accruit has transformed and evolved, overcoming industry challenges and seizing new opportunities. Under the leadership of Brent Abrahm, the company has grown from its beginnings as a Qualified Intermediary for personal property exchanges to a leader in 1031 Exchange solutions for real estate exchanges, recognized nationally as an innovator in the industry.

We recently sat down with CEO and founder, <a href="https://www.accruit.com/about/meet-team/brent-abrahm">Brent Abrahm</a>, to discuss the journey of Accruit, how it has navigated pivotal changes, and his vision for the future.

<h2 aria-level="2" paraeid="{dbb4fafd-8ecb-47f2-bbc9-3372ab4ac0f3}{56}" paraid="1083338061" role="heading">The Early Years: Pioneering Personal Property Exchanges </h2>

Before Accruit became a recognized leader in real estate 1031 Exchanges, it spent many years as the foremost technology-driven Qualified Intermediary for personal property (or business-use assets) exchanges. In fact, prior to the Tax Cuts and Jobs Act of 2017, 75% of the company's focus and revenue came from facilitating exchanges for personal property - high-volume transactions that involved some of the largest corporations in the world, including British Petroleum, Caterpillar, John Deere, BMW, and U.S. Bank.

The foundation for Accruit’s success was built on its unique strategy pioneering high-volume, lower-dollar personal property exchanges, creating a market that didn’t exist before. Beyond facilitating exchanges, Accruit distinguished itself with its ability to manage large volumes of exchanges for corporate clients and its innovative technology solution, <a href="https://www.accruit.com/exchange-manager-pro">Exchange Manager ProSM</a>, the first and only patented 1031 Exchange workflow technology.

“We were known as the personal property Qualified Intermediary and the technology leader,” Brent explained. “Our first big break came from shifting the mindset of ordinary sales and purchases to efficiently capturing 1031 Exchanges for any business assets.”

Accruit’s proven track record in personal property exchanges, combined with patented technology, made Accruit a sought-after partner, even in a competitive landscape. By working with some of the world’s largest organizations, the company built a strong reputation and earned the trust of the industry.

<h2 aria-level="2" paraeid="{dbb4fafd-8ecb-47f2-bbc9-3372ab4ac0f3}{126}" paraid="1288361620" role="heading">Adapting to Change: The Tax Cuts and Jobs Act of 2017  </h2>

<a href="https://www.accruit.com/blog/tax-cuts-and-jobs-act-2017-and-its-effects… Tax Cuts and Jobs Act of 2017</a> marked a turning point for Accruit and the entire 1031 Exchange industry, abruptly eliminating like-kind exchanges for non-real estate transactions. This forced Accruit, and its leadership team, into a critical decision: adapt or risk falling behind.

The sudden loss of the personal property exchange market was a significant challenge. Rather than seeing it as a setback, Brent saw an opportunity. Accruit had already spent nearly two decades building a strong reputation, pioneering technology, and forging relationships with major corporations. These assets became the foundation for its transformation into what Accruit has become today.

“When you're a small organization and you face a massive industry shift, your only choice is to adapt or risk failure,” Brent explained. “We had to completely transform to stay relevant. And that's exactly what we did. We leveraged the technology we had, the reputation we built, and our network to pivot and enter the real estate industry.”

That bold move didn’t just allow Accruit to survive, it was the catalyst that set the company up to thrive. By embracing change, Accruit expanded its scope, strengthened its position in the market, and paved the way for explosive growth.

<h2 aria-level="2" paraeid="{dbb4fafd-8ecb-47f2-bbc9-3372ab4ac0f3}{166}" paraid="660916297" role="heading">The People Behind Accruit’s Success: Building an Industry-Leading Team </h2>

As Accruit scaled from a small company to an industry leader, one of the most rewarding aspects has been the people who have joined the team throughout the years. According to Brent, “The key to our success is the people. As long as we continue to find team members who embrace an entrepreneurial spirit, challenge norms, and think creatively, the journey stays exciting and energizing.”

A key figure in Accruit’s growth has been <a href="https://www.accruit.com/about/meet-team/martin-edwards">Martin Edwards</a>, one of the company’s Managing Directors and long-time 1031 technical advisor. Marty’s relationship with Brent dates back to the 1990s, when Brent was initially learning about 1031s for personal property.

In 2011, Accruit acquired Chicago-based Qualified Intermediary, North Star Deferred Exchange, led by Marty. This acquisition not only added decades of experience but also reinforced Accruit’s entrepreneurial spirit, ensuring that Accruit’s team remained at the forefront of the industry.

“Marty’s company was our original Qualified Intermediary in the 90s when I was with Amoco Production Company. We needed a Qualified Intermediary to launch our like-kind exchange program, and that was Marty,” Brent shared. “He’s been a pillar in our industry and a part of our fabric for a long time.”

Marty’s impact on Accruit extends far beyond legal authority. His deep industry expertise helped shape Accruit’s evolution, particularly in real estate exchanges. Before Accruit’s business relationship with PricewaterhouseCoopers (PwC), Marty was one of the few Qualified Intermediaries handling personal property exchanges, and PwC was already relying on his services.

“Marty was one of a few Qualified Intermediaries understanding high-volume personal property exchanges,” Brent explained. “He’s been in the industry for so long, and his insights and experience have been invaluable to us.”

Reflecting on his own journey with Accruit, Marty shared, “I was a bit unsure about taking the big step to join Accruit, but I made the move because I had a lot of faith in Brent. Over time, my faith proved well-founded as I found him an inspirational leader. It has been a pleasure working with him and the Accruit team he put together.”

The ongoing contributions from Marty and others with similar longevity in the industry have been instrumental in Accruit's success. In 2018, Accruit expanded its reach in the Rocky Mountain region by acquiring Montana-based Qualified Intermediary, American Equity Exchange, led by industry veteran <a href="https://www.accruit.com/about/meet-team/max-hansen">Max Hansen</a>. Founded in 1991, American Equity Exchange managed thousands of successful exchanges before joining Accruit. From 2012 – 2017, Max and Brent worked tirelessly in Washington, D.C. as co-chairs of the Federation of Exchange Accommodators (FEA) Government Affairs Committee, as still Max is an active committee member. Max, now Managing Director at Accruit, has represented clients in real estate transactions for over 40 years. Facilitating his first exchange in 1978, he is a past president of the FEA and past Co-chair of the FEA’s Government Affairs Committee. He continues to serve on the FEA’s Government Affairs Committee, is a member of the Sales, Exchanges and Basis Committee of the ABA Tax Section, and mentor to the next level of specialized 1031 attorneys and business development team members at Accruit.

Marty and Max’s expertise, along with the dedication and talent of the broader team, has made Accruit the innovative force it is today.

Accruit’s success is built on its ability to attract and retain individuals who are passionate about innovation and willing to push boundaries. “We revolutionized 1031 Exchanges. It wasn’t just a slogan, we truly disrupted the marketplace, and that success has been fueled by the team we’ve assembled,” Brent said.

<h2 aria-level="2" paraeid="{41b3e20b-33d3-4dfc-a86c-20420fc9d8ec}{37}" paraid="2091697238" role="heading">Leading Through Change and Looking Ahead: The Future of Accruit </h2>

After 25 years at the helm, Brent’s passion for Accruit remains as strong as ever. He attributes his continued enthusiasm to the opportunities within the market and the dedicated team driving the company forward.

In April 2023, Accruit was acquired by <a href="https://inspirafinancial.com/">Inspira Financial</a>, a leading provider of health, retirement, wealth, and benefits solutions. This acquisition was a major milestone in Accruit’s expansion, enabling the company to offer its full suite of 1031 Exchange solutions to Inspira’s extensive client base of over 5 million people, with more than $65 billion in assets under custody. The acquisition was completed after an extensive process and in-depth evaluation of numerous companies, Accruit found the right match in Inspira Financial. For over 20 years, Inspira Financial has provided access to and custody solutions for <a href="https://inspirafinancial.com/business/retirement-wealth/alternative-inv… asset investments</a> including real estate, making the company and its existing clients a great fit for Accruit’s real estate 1031 Exchange services.

For Brent, the synergies just don’t impact revenue growth, it’s about aligning visions and shaping the future of the industry. “We’re focused on becoming a leading force in the industry and continuing to innovate in ways that benefit the entire exchange market. Seeing our vision play out by revolutionizing the industry has been worth the 25-year effort.”

He also emphasized the importance of education and collaboration within the industry. “I’m passionate about seeing the entire 1031 Exchange industry grow,” he said. “There’s room for everyone to succeed, and I’m excited to be part of an industry that’s constantly evolving and moving forward.”

Brent’s enthusiasm for the future is contagious. “Accruit’s next chapter is incredibly exciting. We’re looking forward to growing within Inspira Financial and seeing where those opportunities take us. The potential for expansion and innovation is limitless, and I’m excited to see how much of our vision will come to fruition in the next five years.”

<h2 aria-level="2" paraeid="{41b3e20b-33d3-4dfc-a86c-20420fc9d8ec}{188}" paraid="1693561392" role="heading">A Message to Employees, Clients, and the 1031 Exchange Industry </h2>

As Accruit celebrates 25 years, Brent has a special message for employees, clients, and colleagues in the 1031 Exchange industry:

“I’m still wildly passionate about this industry. We’ve come a long way, but the best is yet to come. The market has incredible growth potential, and I believe that through education, collaboration, and constant innovation, we can continue to move the entire industry forward.”

Brent's commitment to leadership, growth, and industry development has been instrumental in Accruit’s success. As we embark on the next chapter, there’s no doubt that Accruit, with the team we’ve assembled, will continue to lead with our bold vision, innovative approach, and dedication to the success of the entire 1031 Exchange industry.

Here’s to 25 years of success and to an even brighter future ahead!

Mon, 03/24/2025 - 17:14

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Considerations for 1031 Exchanges Involving Foreign Property

03/18/25

A 1031 Exchange allows Exchangers to defer associated taxes when exchanging one investment property for another. While foreign property may be ...

Authored by: meredithb@accruit.com

Authored on: Tue, 03/18/2025 - 08:00

1031 Exchange General

Selling foreign real estate and reinvesting in other foreign real estate through a 1031 Exchange presents unique challenges beyond those of a 1031 Exchange with domestic property. While tax deferral benefits can still apply, factors such as differing tax codes and fluctuations in currency and markets require careful planning. In this blog, we explore important considerations for Exchangers contemplating a 1031 Exchange involving foreign property.

<h2 aria-level="2" paraeid="{afce4dcf-2f2c-4fb2-942a-22081b34c279}{243}" paraid="1792713668" role="heading">Foreign Property Is Not Like-Kind to U.S. Property </h2>

In a 1031 Exchange, both Relinquished and Replacement Properties must be like-kind, meaning real estate held for business or investment can be exchanged for another, regardless of type (ex. a multi-family property for an office building). For U.S. exchanges, properties must be within the continental U.S. Puerto Rico is excluded, but the U.S. Virgin Islands may qualify. In the context of 1031, <a href="https://www.accruit.com/blog/1031-exchanges-involving-foreign-property"… properties</a> can only be exchanged for other foreign properties, regardless of location. Domestic and foreign properties cannot be exchanged with each other.

<h2 aria-level="2" paraeid="{352fb7ca-c8d1-4146-885b-962a834dffe3}{13}" paraid="893525107" role="heading">Tax Treatment in Foreign Jurisdictions </h2>

When conducting a 1031 Exchange with foreign property, it’s crucial to understand how the tax laws of the foreign country may impact the transaction. While the U.S. allows tax deferral under IRC §1031, most other countries do not recognize this provision, potentially resulting in immediate tax liabilities. In some cases, foreign countries impose higher capital gains tax rates than the U.S. (as high as 50%), reducing the benefits of deferral.

Another consideration is how foreign taxes interact with U.S. tax rules. If you pay capital gains tax in another country, you might be able to claim a foreign tax credit (FTC) or a deduction on your U.S. tax return. However, timing differences can create problems. If the foreign country taxes the gain right away but the U.S. delays recognition, you may not be able to fully use the FTC, which could lead to double taxation. Some tax treaties help by providing credits, but they don’t override the basic rules of §1031.

Besides capital gains taxes, Exchangers may face extra costs like stamp duties, value-added tax (VAT), or other transaction fees, making exchanges more complicated and expensive. These taxes usually can’t be recovered or deducted on a U.S. tax return, so it’s important to consider their impact. Another factor is estate and inheritance taxes, as some countries impose high taxes on property owned by non-residents. Using a foreign entity or trust to hold real estate might help reduce these risks, but it’s critical to properly structure a 1031 Exchange to follow both U.S. and foreign tax laws.

<h2 aria-level="2" paraeid="{352fb7ca-c8d1-4146-885b-962a834dffe3}{43}" paraid="1482344885" role="heading">Foreign Currency Factors </h2>

Investing in foreign real estate comes with financial risks due to currency fluctuations, local market conditions, and regulatory factors. For a 1031 Exchange of foreign property, the Exchanger has two potential options for exchange funds to be held with the Qualified Intermediary (QI) in a United States bank. The first option is for the exchange funds to be held in the foreign currency within a foreign currency bank account; however not all banks can accommodate these types of accounts and there is additional documentation and security measures in place for holders of these accounts to reduce the banks associated risk with foreign money movements. The second option is to exchange the foreign currency into U.S. dollars. In this situation, the funds from the sale of the Relinquished Property are sent to the QI in the U.S. where they are converted to U.S. dollars prior to being converted back to the foreign currency to be wired internationally for the purchase of the Replacement Property(ies). During this process, exchange rates and additional transaction fees come into play, as the sale proceeds must be converted from U.S. dollars to the local currency for Replacement Property acquisition, requiring additional work for the QI to coordinate with banks.

Since property values are based on the local currency, changes in exchange rates can significantly impact both the purchase and sale price when converted to U.S. dollars at the time of the Relinquished Property sale. If said foreign currency weakens against the U.S. dollar, the investment's value may decline upon conversion. Currency shifts can also have tax consequences, as the IRS may treat significant exchange rate differences between sale and purchase as a foreign exchange gain or loss, potentially leading to extra tax liabilities.

<h2 aria-level="2" paraeid="{352fb7ca-c8d1-4146-885b-962a834dffe3}{70}" paraid="1668679055" role="heading">Market Risks </h2>

In addition to currency fluctuations, inflation and interest rates in other countries can affect property values and loan costs. High inflation can reduce buying power, while changes in interest rates can make mortgages more expensive and impact demand for real estate. Additionally, some countries impose foreign exchange restrictions that limit the transfer of money across borders. If these restrictions tighten, it could become difficult for funds to be sent to the QI upon the sale of the Relinquished Property.

Political and economic instability is another factor to consider. Changes in government policies, real estate regulations, or foreign ownership laws can lower property values and limit an Exchanger’s ability to buy, sell, or manage properties. In uncertain regulatory climates, unexpected restrictions on foreign real estate transactions can add even more unpredictability.

Given the complexities of 1031 Exchanges involving foreign property, Exchangers should carefully evaluate any risks before proceeding and understand that due to the increased complexities involving foreign currency and the additional steps and scrutiny involved, the cost for a 1031 Exchange involving foreign property is significantly higher than a 1031 Exchange with domestic property. Working with experienced legal and tax professionals, as well as a Qualified Intermediary such as Accruit, can help navigate the challenges and maximize the benefits of a foreign property exchange.

The material in this blog is presented for informational purposes only. The information presented is not investment, legal, tax or compliance advice. Accruit performs the duties of a Qualified Intermediary, and as such does not offer or sell investments or provide investment, legal, or tax advice.

Tue, 03/18/2025 - 14:34

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IRS Announces Tax Relief for West Virginia Taxpayers Impacted by Severe Storms

03/14/25

The IRS has issued tax relief for West Virginia residents or business owners, in multiple counties, that have been impacted ...

Authored by: meredithb@accruit.com

Authored on: Fri, 03/14/2025 - 18:56

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<h3 paraeid="{89b384a6-5521-41e7-a220-e57e6779373d}{185}" paraid="760886701">Due to severe storms, straight-line winds, flooding, landslides and mudslides, the IRS has issued Tax Relief for counties within West Virginia.</h3>

Affected Taxpayers have until November 3, 2025, to make tax payments and file for various individual and business tax returns.

Currently, all individuals and households that reside in or have a business within Logan, McDowell, Mercer, Mingo, Wayne and Wyoming counties in West Virginia qualify for tax relief. Any area added to the disaster area at a later time will also qualify for tax relief.

Who is an "Affected Taxpayer"?

Relief Specific to 1031 Exchanges for Affected Taxpayers

Relief for Taxpayers with Related Difficulties

The material in this blog is presented for informational purposes only. The information presented is not investment, legal, tax or compliance advice. Accruit performs the duties of a Qualified Intermediary, and as such does not offer or sell investments or provide investment, legal, or tax advice.

Fri, 03/14/2025 - 20:04

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