Can You Do a 1031 Exchange on a Manufactured Home?
A 1031 exchange is a tax-deferred investment strategy that lets you swap two like-kind properties. Since the transaction may qualify for tax deferral, you can delay capital gains tax payments and preserve your capital. However, taxes are not eliminated and may apply under certain circumstances. The types of assets you can exchange are regulated by the IRS, so you can’t exchange properties on a whim.
What Is a 1031 Exchange Custodian?
Among the many professionals you’ll need to work with during a like-kind swap, the qualified intermediary (sometimes informally referred to as a custodian, accommodator, or facilitator) is among the most essential professionals involved in a like-kind exchange. Who is the custodian? While sometimes referred to as a custodian, the formal IRS term is qualified intermediary. These entities help coordinate the transaction by holding sale proceeds, preparing required documentation, and facilitating timely reinvestment.
Do You Need a Realtor To Do a 1031 Exchange?
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.
What Is the Escrow Fee for a 1031 Exchange?
A 1031 exchange supports tax deferral—but it still incurs fees, including escrow charges. Escrow fees cover the cost of securing sale proceeds in a neutral account managed by your qualified intermediary to preserve the tax-deferred status. Typically ranging from 1–2% of the property value, these fees are classified as exchange-related closing costs—which reduce your reinvestment requirement, rather than being independently deductible. Realized 1031 shares a clear guide below explaining how escrow fees work and their impact on your exchange.
Depreciation Recapture in a 1031 Exchange: What To Consider
When undergoing a 1031 exchange, investors often focus on deferring capital gains taxes associated with the sale of investment property. However, another important consideration is depreciation recapture—a provision that may require a portion of prior depreciation deductions to be taxed upon a triggering event, such as the sale or disposition of the asset.
