Section 1031 Forward Exchanges

Rattikin Exchange Services specializes in Section 1031 tax-deferred exchanges. A Section 1031 tax-deferred exchange is the logical choice for real estate investors who want to trade one qualifying property for another while deferring federal capital gains taxes. For your Section 1031 tax-deferred exchange, choose an experienced and trustworthy qualified intermediary. Choose Rattikin Exchange Services, Inc.

The Forward Exchange Process

In order to initiate an exchange, a property owner must appoint a qualified intermediary. The intermediary will prepare several instruments required to document the exchange, including the following:

  • Exchange Agreement – This agreement outlines the rights and obligations of the parties involved in the exchange.
  • Assignment of Rights and Notification – Relinquished Property Contract – This agreement assigns property owner’s interest in contract, which entitles the intermediary to receive and hold the net proceeds pending sale.
  • Notice, Waiver and Release – This document outlines the time deadlines and client obligations during the exchange process.
  • W-9 Form – This form allows the intermediary to invest the sales proceeds in an account on behalf of the client.
  • Identification of Replacement Property – This document should be completed by the client when identifying the replacement property that will be purchased.


Once these documents have been completely executed, the intermediary will notify the title company handling the closing of the sale. The title company will close the transaction in the usual fashion. All legal documents, including the Warranty Deed, will be executed by the property owner, and given to the buyer (called “direct deeding”).

Once the transaction closes and the intermediary receives the net proceeds, the proceeds will be invested by the intermediary in an interest bearing account on behalf of the client. The client will receive all interest that accrues on the account during the pendency of the exchange.

After closing, the client has 45 days to identify a replacement property he or she wishes to purchase. At this time, the client will execute the Identification of Replacement Property paperwork. The client has 180 days from the date of the sale of the first property to complete the purchase of the replacement property.

At the time of closing of the replacement property, the intermediary will turn over to the title company all funds held to be applied toward the purchase price.

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