An important aspect of a like-kind exchange is that the exchanger cannot take receipt of sales proceeds during the exchange. JTC acts as a Qualified Intermediary (QI), receiving the sales proceeds from the relinquished property sale and holding them until they are released to purchase the replacement property.
There are many types of 1031 exchanges, including forward and reverse exchanges and those involving multiple properties or Delaware Statutory Trusts. JTC works with our clients to determine the best methods for their particular exchanges and the solutions required to ensure success for each unique situation.
Because of our commitment to security, transparency, and regulatory compliance, JTC helps our 1031 exchange clients execute successful exchanges that achieve tax deferral while also offering them peace of mind that their funds are being handled properly.
Extensive 1031 Experience and Expertise
Our legal and client services teams’ experience in accounting, banking, and technology sets us apart. We can handle large and complicated exchange scenarios that many Qualified Intermediaries cannot.
Ultimate Transparency
When an exchange is conducted with JTC, clients get 24/7 access through our online Exchange Manager portal, which displays up-to-date exchange status information and provides a comprehensive audit trail.
Industry-Leading Security and Safeguards
We were the first to implement security measures that are now industry standard, such as:
- Exchange funds are only held in FDIC-insured, fully liquid accounts at highly rated banks
- Professional Indemnity Insurance and cyber insurance
- Exchange funds are placed in individual qualified escrow accounts
- Exchange funds are never commingled in operating accounts
- Funds are released from escrow only with approval of both the Qualified Intermediary and the exchanger
This solution enables clients to defer capital gains and depreciation recapture taxes when they sell a business or investment property and buy like-kind property of equal or greater value. In a forward exchange, it is sell first, then buy.
Read More About 1031 Forward Exchanges
A reverse exchange gives the exchanger the flexibility to acquire the replacement property first and sell their relinquished property later. This is done utilizing a “parking arrangement” whereby the Exchange Accommodation Titleholder (EAT) holds the replacement property until the relinquished property can be sold. With a reverse exchanges, it’s buy first, then sell.
Read More About 1031 Reverse Exchanges
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Delaware Statutory Trusts
Delaware Statutory Trusts (DSTs) provide an alternative replacement property for 1031 exchangers, utilizing special provisions of Delaware trust law to create an investment vehicle that can purchase a diverse range of properties. Exchangers who purchase units in a properly-structured DST are treated as having acquired their proportionate interest in the trust-owned real estate, meaning a DST interest can be used as a 1031 replacement property. DSTs offer the advantages of professional real estate management and portfolio diversification alongside the potential for a monthly income stream.
Learn More About Delaware Statutory Trusts
For DST managers, JTC offers end-to-end services that include trustee services in Delaware, DST administration, and QI services for investor 1031 exchanges into and out of the trust. Our deep understanding of DST rules allows us to properly create the trust structure within IRS and Delaware guidelines, and a streamlined subscription process allows for fast onboarding. Customizable administration means our clients can get the services they need for each stage of the trust’s lifecycle, with the ability to add further services as they go.
Learn More About JTC’s Delaware Statutory Trust Administration Services
Washington state law, RCW 19.310.040, requires an exchange facilitator to either maintain a fidelity bond in an amount of not less than one million dollars that protects clients against losses caused by criminal acts of the exchange facilitator, or to hold all client funds in a qualified escrow account or qualified trust that requires your consent for withdrawals. All exchange funds must be deposited in a separately identified account using your taxpayer identification number. You must receive written notification of how your exchange funds have been deposited. Your exchange facilitator is required to provide you with written directions of how to independently verify the deposit of the exchange funds. Exchange facilitation services are not regulated by any agency of the state of Washington or of the United States government. It is your responsibility to determine that your exchange funds will be held in a safe manner.
