If you enter a 1031 exchange for its tax-deferral benefits, you’ll need to work with various professionals, companies, and other entities to ensure a successful transaction. Some are absolutely required, such as the qualified intermediary. Others are optional, such as a 1031 exchange realtor. Do you need a realtor to do a 1031 exchange, then? Realtors can assist with identifying like-kind properties, coordinating closings, and navigating market conditions, all of which can be beneficial within the exchange timeline.
Below, Realized 1031 has shared a straightforward guide discussing the role of the 1031 exchange realtor so you can understand why engaging with them may be beneficial in the like-kind swap.
While realtors are not required to complete a 1031 exchange, working with an agent who understands the unique timeline and property requirements of a like-kind exchange can add meaningful value—particularly in time-sensitive real estate markets.
It’s important to note that the Qualified Intermediary (QI)—not the realtor—ensures that proceeds from the sale are held in a manner that complies with IRS requirements regarding constructive receipt and arm’s-length transactions.
Although realtors provide market and transactional expertise, they do not provide tax or legal advice and are not responsible for ensuring IRS compliance. That responsibility lies with the taxpayer, QI, and their legal/tax advisors.
How do you choose a 1031 exchange realtor? Here are a few characteristics to look for.
The rules of 1031 exchanges can be complex. A regular real estate agent may not have the experience and knowledge to navigate these requirements. Look for agents who have handled transactions involving 1031 exchanges and understand how sale and purchase timelines impact IRS compliance.
Choose someone who knows the local market well and can help you find or sell property quickly. This expert knowledge can also help in pricing your real estate asset at a competitive range.
A well-connected realtor can introduce you to reliable qualified intermediaries, lenders, inspectors, and closing agents. These referrals can assist with assembling your exchange team, though independent vetting is essential.
Evaluate an agent’s responsiveness, clarity in communication, and client references. While past transaction history can provide insight into experience, make sure expectations are aligned and that the agent does not overpromise outcomes
While realtors are not responsible for the tax or legal compliance of a 1031 exchange, a knowledgeable agent can provide valuable support during the process. These experts assist in marketing the relinquished property, identifying potential replacement properties, which must ultimately be evaluated for like-kind qualification by a tax advisor within the required timeframe, and navigating local market dynamics. Additionally, experienced realtors often collaborate closely with qualified intermediaries, attorneys, and tax advisors. Their familiarity with local inventory and negotiation strategies can also be instrumental in helping clients secure desirable properties that meet like-kind requirements, subject to professional tax and legal review.
When choosing a realtor for a 1031 exchange, prioritize those with experience in exchange-related transactions, a strong understanding of the local market, and a professional network that includes closing agents and service providers. While they do not manage IRS compliance, a well-informed realtor can help coordinate key steps in the real estate portion of your exchange strategy.
The tax and estate planning information offered by the advisor is general in nature. It is provided for informational purposes only and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Article written by: Story Amplify. Story Amplify is a marketing agency that offers services such as copywriting across industries, including financial services, real estate investment services, and miscellaneous small businesses.
Sources:
https://www.americanbar.org/groups/real_property_trust_estate/resources/real-estate/1031-exchange/
https://www.hellodata.ai/help-articles/1031-exchange-timeline-overview
https://turbotax.intuit.com/tax-tips/investments-and-taxes/1031-exchange-how-it-works/c998pvsTp