Standard 1031 Delayed Exchange

Step One

Relinquished Property

In the event the exchanger performs a standard 1031 exchange rather than the traditional sale, Sterling Exchanges should be contacted right away. As long as we are notified and can get things started on our end before the close of escrow on the relinquished property, we will be able to help you defer your capital gains tax liability. It is crucial that everyone involved in your transaction (i.e. your real estate agent, attorney-if applicable, escrow officer, CPA, etc.) is notified about your intent to exchange.

​

We will prepare our Exchange Agreement and other necessary documentation in order to facilitate your 1031 exchange. We work closely with your escrow officer and real estate agent. Upon close of escrow, the Exchanger transfers the relinquished property to Sterling Exchanges and then we will simultaneously sell the property to the buyer in the transaction. Once the escrow has been closed, Sterling Exchanges will hold the net proceeds until a replacement property has been found. 

Step Two

Replacement Property

There are two timelines involved in the standard 1031 delayed exchange once escrow has closed on the relinquished property. The first is the exchanger's identification period. From the day of close of escrow, the exchanger will have 45 days to identify the property they intend to buy. The second timeline is in relation to when the exchanger must close on the property they are buying. This timeline also begins on the close of escrow of the relinquished property and ends 180 days thereafter. 

​

Once the exchanger has entered into a purchase agreement on the replacement property, Sterling Exchanges should be notified in order to start the proper documentation. The replacement property will be purchased by Sterling Exchanges and then will be transferred to the exchanger in order to complete the exchange.