A 1031 exchange is a three-step process and one in which an exchange specialist will guide you through:
Step 1: Selling the Property Your 1031 exchange accommodator will prepare and organize the required documentation you will need to complete, and an exchange specialist will notify you of important dates during the exchange process.
Step 2: Identifying a Replacement Property IRC §1031 requires that identification of a replacement property take place within 45 days.
Step 3: Purchasing a Replacement Property With the guidance of an exchange specialist, you will purchase the replacement property within 180 days of the sale of the relinquished property. The exchange accommodator will transfer the proceeds from the sale of the relinquished property to your escrow company and upon closing, you will receive the deed to the replacement property.
There are several types of exchanges: Simultaneous Exchange, Delayed Exchange, Reverse Exchange, Improvement Exchange and Personal Property Exchange.