CPA-led 1031 exchange guide
1031 Exchanges for Real Estate Agents
Real estate agents often see the exchange opportunity before anyone else. Asking an investment-property seller about a possible Section 1031 exchange early can create time for the client to consult tax and legal advisors and engage a Qualified Intermediary before closing.
Questions to ask at listing or offer
Ask whether the property has been held for investment or business use, whether the seller expects to acquire replacement real estate, and whether the sale may create a significant gain. These are screening questions, not tax conclusions.
- How has the property been used?
- Is replacement real estate already being considered?
- What is the expected closing date?
- Has the seller spoken with a tax advisor and Qualified Intermediary?
Bring in the Qualified Intermediary before closing
A delayed exchange is time-sensitive. The exchange workflow and closing instructions should be coordinated before the client receives or controls sale proceeds. Early referral gives escrow, title, the QI, and the client's advisors time to align the documents.
Help the client plan for identification
The 45-day identification period begins when the relinquished property transfers. Agents can help clients search and document candidate properties, but the investor and advisors remain responsible for the identification strategy and transaction decisions.
Keep the agent role clear
Agents should avoid promising eligibility, deferral, or a specific tax result. The strongest service is timely issue spotting, accurate transaction communication, and coordination with qualified tax, legal, escrow, title, and exchange professionals.
Frequently Asked Questions
When should an agent refer a seller to a Qualified Intermediary?
As early as possible and before the relinquished-property closing.
Can an agent advise whether the exchange qualifies?
Agents can identify the issue and coordinate the transaction, but transaction-specific tax and legal conclusions should come from the client's qualified advisors.