The Advantages of Working With an Exchange Accommodator
Become a Certified Exchange Accommodator by passing a rigorous certification exam and passing an ongoing education requirement. The FEA established the CES certification to raise the level of professionalism in the exchange facilitation industry. The FEA’s CES certification is the first of its kind and was developed through three years of research and consultation with more than 100 exchange accommodators. The CES designation ensures that the exchange accommodator has the necessary knowledge and experience to effectively facilitate exchange transactions.
Those who can act as exchange accommodators can be licensed real estate agents, lawyers, title professionals, accountants, and independent financial consultants. Exchange accommodators like 1031 Exchange Texas are experts in the process of buying and selling foreign properties. They can help you avoid the pitfalls and get the most out of your exchange by offering sound advice. Listed below are some of the advantages of hiring a qualified exchange accommodator:
The Exchange Accommodator must have legal title to the property being transferred and must be subject to federal income tax. This property must be held in the legal title until the replacement property is transferred. Furthermore, the taxpayer must have a bona fide intent to engage in a qualified exchange and hold legal title to the property until it is transferred to the new owner. These are a few of the many benefits of working with an Exchange Accommodator.
Using an Exchange Accommodator to exchange your real estate is an excellent option for those who are looking to maximize their tax benefits. However, a reverse exchange is not an alternative to a forward exchange because the replacement property cannot be sold first. The replacement property must be parked for 180 days with the Exchange Accommodator’s Titleholder before the reverse exchange takes place. The reverse exchange process is a bit different from a forward exchange, but it does allow the taxpayer to have control over the replacement property.
As an Exchange Accommodator, you’ll need to comply with the Federation Of Exchange Accommodators’ strict code of ethics. The FEA is the industry trade association that oversees the certification of intermediaries.
The safe harbor procedure in the reverse like-kind exchange is important. Rev. Proc. 2000-37 provided a safe harbor for exchanges involving real estate that was previously owned by a taxpayer within 180 days. The IRS will not challenge the property’s qualification as a replacement or relinquished property as long as it is a qualified exchange accommodation arrangement. In addition, a qualified exchange accommodation arrangement is subject to the safe harbor provisions set forth by the Internal Revenue Service.
A Qualified Intermediary, also known as an Exchange Accommodator, is a professional who completes all paperwork for a compliant exchange and holds the funds that result from the sale of relinquished assets in escrow. An Exchange Accommodator’s role is critical to the successful completion of the exchange transaction, as any misstep or error can disqualify your exchange and lead to substantial tax liability.
In addition to being a qualified intermediary, an Exchange Accommodator will help you navigate the complicated rules of exchanges. These regulations are very strict, and improperly followed may result in an unnecessary tax liability. Whether or not you’re a qualified exchange accommodator, it’s always better to use the services of an expert in this area.
Parking transactions are also a popular type of exchange. With this type of transaction, a third party holds a replacement property and exchanges it with the owner of the relinquished property. In return, the accommodator receives the relinquished property and distributes it among its customers. This way, both parties benefit from the parking exchange. However, it’s important to be aware of the risks associated with parking exchanges.