DELAYED EXHANGE

A delayed exchange is the most common exchange format, providing investors the flexibility of up to a maximum of 180 days to purchase a replacement property. The use of an  Intermediary is required to complete a valid delayed exchange. The Intermediary prepares the necessary exchange documents to assist the Investor with meeting the requirements of the exchange.

A delayed exchange involves three steps.

1. SALE OF THE RELINQUISHED PROPERTY
   Prior to or at the closing the sale of the Relinquished Property, the Investor enters will enter into the Exchange Agreement with IES. In accordance with the Exchange Agreement, Investor will assign its rights under the sales contract to IES.   Notwithstanding this assignment, IES instructs the closing/escrow officer or closing attorney to directly deed the Relinquished Property from  Investor  to the buyer.  In other words, in a delayed exchange, IES will never take title to either the Relinquished Property or the Replacement Property.  The Exchange Proceeds are transferred directly to IES from the sale, thereby protecting the Investor from actual or constructive receipt of funds.
2. IDENTIFICATION OF REPLACEMENT PROPERTY
   Investor must properly identify potential replacement properties within 45 calendar days from the closing on the Relinquished Property.  The identification must adhere to the strict identification rules set forth in Section 1031 of the Internal Revenue Code.  Link to Identification Rules.
3. PURCHASE OF THE REPLACEMENT PROPERTY
   Investor has a total of 180 calendar days from closing of the relinquished property, or their tax filing date for the tax year in which the sale of the Relinquished Property occurred, whichever is earlier, to acquire the “like-kind” Replacement Properties identified within the 45-day identification period. Prior to closing on the Replacement Property, Investor will assign Investor’s rights under the purchase contract for the Replacement Property to IES.  IES will transfer the Exchange Proceeds to the closing/escrow officer or closing attorney handling the purchase of the Replacement Property and this amount will be credited against the purchase price.  As with the Relinquished Property, IES will instruct the closing/escrow officer or closing attorney handling the purchase to have the deed to the Relinquished Property transferred directly from the seller to Investor.