In order to maintain their investment position while avoiding current capital gains taxes, investors who want to get the most out of their real estate investments frequently use a 1031 exchange to reinvest the proceeds from selling a property (or business) in another “like-kind” property. But given the complexity of exchanges carried out in accordance with Section 1031 of the Internal Tax Code’s rigorous regulations, that is far easier said than done. There is no space for error because any mistakes might be highly expensive.
Working with a reliable, full-service 1031 exchange company has this benefit. However, because to their scale, they are typically significantly less expensive than hiring an attorney on an hourly basis. There are numerous 1031 exchange companies; some are regionally focused, while others are national in scope. The bigger and more reputable businesses have the experience, knowledge, resources, stability, and scale to offer top-notch services at competitive costs. To reduce the list to the best 1031 exchange companies in each of six categories, we looked at the biggest companies.
IPX1031
Our choice for the finest overall 1031 exchange firm is IPX1031 since it is a national leader in 1031 exchanges and has few competitors in terms of its national presence, track record, financial strength, specialization, and in-house experience.
Pros
- Long history of successful exchanges
- Supported by the monetary resources of a Fortune 500 title company
- A separate national office for complicated deals
- Experts in local issues
- Complete variety of 1031 exchange services
Cons
- Complex exchange fees are at the high end of the pricing range
Summary
When it was established in 1988, IPX1031 was one of the first qualified intermediaries. Since then, they have increased their presence across the country to include all major cities, completing hundreds of 1031 exchanges annually, which is why it takes home the title of best in class. Fidelity National, one of the biggest title insurance providers, is backing IPX1031, giving it the financial clout necessary to endure even the worst economic downturns.
In order to ensure that clients have access to the greatest knowledge in these crucial exchanges, IPX1031 maintains a distinct national office that focuses on the more difficult improvement and reverse exchange operations. The company has 35 locations nationwide, and the qualified intermediates who work in the regional offices are authorities on state and municipal issues. IPX1031 is able to provide title services as well as comprehensive settlement services because it is a subsidiary of a sizable title business.
Depending on the region and the type of exchange, different exchange services have different fees. A reverse exchange may cost as much as $7,000 to $13,000 depending on the property’s valuation, location, and general complexity. The base charge for delayed exchanges is in the range of $750 to $900. After making an exchange request, each price is individually quoted.
IPX1031 is covered by a $50 million performance guarantee, a $30 million errors and omissions insurance policy, and a $100 million fidelity bond.
First American Exchange
You need dependability, financial stability, quick processing, ease, and a proven track record when selecting a 1031 exchange provider. We think First American Exchange is the greatest value among 1031 exchange companies because it offers everything at a fair price.
Pros
- Strong reputation and solid track record
- Supported by the financial strength of one of the leading title companies in the U.S.
- Exchange professionals are available in all states
Cons
- Not the strongest security measures, including bonding and liability coverage
Summary
One of the more reputable 1031 exchange organizations with a strong track record is First American Exchange, which is a major plus in this industry. It is our choice for the best value in a 1031 exchange firm since it also provides the best in ease, efficiency, reliability, security, and financial stability at very affordable pricing.
One of the biggest and most reputable suppliers of title insurance and settlement services is First American Financial Corporation, of which First American is a direct subsidiary. First American has a vast national footprint and extensive knowledge handling successful transactions.
First American provides both reverse and delayed exchanges. They have 1031 exchange specialists accessible for clients in every state, so they are well-versed in the regulations unique to each jurisdiction. Additionally, they have a full staff of accountants and attorneys to help investors with tax and legal issues. First American can provide title insurance and comprehensive settlement services for real estate and mortgage companies in addition to its exchange services.
The rates charged by First American are reasonable and vary slightly by location. A delayed exchange costs between $600 and $1,800. The fees for more complex exchanges, such reversal and improvement, are significantly greater and determined on the intricacy of the transaction.
First American holds a multimillion dollar fidelity bond in addition to keeping all funds in separate, FDIC-insured accounts. Indemnifies loss of funds within its control as well.
Exeter 1031 Exchange Services
Exeter 1031 Exchange Services tops our list as the best 1031 exchange firm for difficult exchange deals because it has organized its business and resources to explicitly assist more complex exchanges, like reverse and improvement swaps.
Pros
- Expertise and structure to handle most complex transactions
- Money-back guarantee
- Owns a separate trust company to strengthen security measures
- 24/7 access to exchange coordinators
Cons
- Most locations are in western U.S., no offices on the East Coast
Summary
Exeter 1031 Exchange Services was established in 2004 by seasoned business professionals who have some knowledge with difficult 1031 exchanges. Although it provides a wide range of exchange services, it is known for expertly and rapidly processing complicated transactions, and it backs up all of its offerings with a money-back guarantee. Exeter is the top 1031 exchange business for complex exchanges in our opinion because of this.
In order to facilitate its more complex operations and increase efficiency and security for its clients’ money, Exeter formed a number of subsidiary businesses. The Exeter Trust Company was created to retain and safeguard customer monies in segregated, dual-signature Qualified Trust Accounts while maintaining their privacy. The Exeter Trust Company is governed and audited by the Wyoming Division of Banking. Investors who desire to hold their real estate assets in a self-directed IRA can also use the trust business as their IRA custodian.
In order to provide specialist services for arranging and managing reverse and improvement exchanges when legal title needs to be acquired and “parked” for reverse and build-to-suit transactions, the company additionally added Exeter Asset Services. The business also manages exchange strategies for safe and insecure harbors.
The only 1031 exchange business on this list that provides exchange coordinators with round-the-clock phone and email access is Exeter. Also, it is the only business on the list to provide a money-back guarantee that guarantees to return up to 100% of the exchange setup price if customers are dissatisfied.
Typically, the cost of a delayed conversion is between $850 and $1,200 per transaction, plus an administration cost of $300 to $400.
Exeter carries a $5 million fidelity bond and $5 million in errors and omissions coverage in addition to protecting its clients’ cash in a qualified trust.
Strategic Property Exchanges, LLC
Strategic Property Exchanges, LLC bills itself as a 1031 exchange tax and business planning expert, and it has the professionals, resources, and tools to support that claim. Because of this, it ranks among the top 1031 exchange companies for both tax and business planning on our list.
Pros
- Extensive knowledge and resources for developing business and tax strategies
- Comprehensive exchange service providing
- Will offer tax advice to protect clients from IRS problems
- Strong security measures
Cons
- Only two office locations
- Does not disclose pricing
Summary
Strategic Property Exchanges (SPE) claims to provide “complete exchange management.” They see a 1031 exchange as a component of a holistic business strategy rather than as a standalone transaction. We choose them as the best 1031 exchange firm for tax and business planning because they have the knowledge, resources, and staff of board-certified tax and business specialists to make it happen.
The organization, which was founded in 1990, ensures that each of its clients achieves their real estate investing goals by looking beyond the exchange transaction to the tax and business strategy ramifications. Our team of tax and exchange specialists assists clients in reorganizing their organizations, partnerships, and real estate holdings to maximize tax savings. In order to handle all legal matters connected with transactions, it also operates a boutique law company.
To ensure that its clients’ exchanges are set up and executed in accordance with stringent IRS rules, SPE guarantees its exchange transactions. SPE offers tax opinions through its legal company to support its tactics and shield clients from IRS challenges.
SPE offers all the services associated with common exchanges, but it also offers specialized exchange services for less frequent and more complex exchanges, such as tenant in common, partnership, foreign-owned property, and exchanges involving overseas or vacation property.
The business uses dual-signature, segregated, FDIC-insured accounts to maintain the security of the money. The business offers free government-issued insurance to protect 100% of savings for deposits exceeding $250,000. SPE also has errors and omissions insurance and a fidelity bond.
Each case is unique, and as it involves considerable tax, legal, and commercial planning, they also provide custom pricing.
Wells Fargo
One of the few big banks with a commercial section and 1031 exchange services is Wells Fargo. Wells Fargo is our top pick for the finest 1031 exchange provider for comprehensive banking services since exchange clients have access to full banking, lending, mortgage, and financial advising services.
Pros
- One of the biggest financial institutions in the United States provides financial support for 1031 exchange service
- Comprehensive banking services, including financing for new properties, to supplement exchange service
- Vast expertise and support
Cons
- Fees aren’t disclosed
- Many customers have expressed their dissatisfaction with banking services
Summary
Wells Fargo is one of the biggest and oldest financial companies in the nation. It was founded in 1852. It has a whole division specialized to carrying out 1031 swaps, staffed with qualified intermediates. Working with a corporation like Wells Fargo has the benefit of centralizing all the banking services you might require for a 1031 exchange, including financing replacement properties.
Another benefit is its extensive reach into most states, providing access to services and assistance and localized experience.
Wells Fargo is fully bonded, has liability insurance, and errors and omissions insurance for its 1031 exchange services. By storing exchange cash in internal, FDIC-insured accounts, it adds an additional layer of security.
The corporation is regarded as having excellent financial standing despite not having the highest possible ratings from the rating agencies (AA from Fitch, AA from Moody’s, and A+ from Standard & Poor’s). Many websites include thousands of consumer reviews of Wells Fargo, not all of them are complimentary. Bankrate awards it 3.2 stars, while Wallet Hub offers it 3.8 out of 5 stars. None of the negative evaluations, however, mention the bank’s 1031 exchange services in any way.
Wells Fargo 1031 exchange fees are offered upon request and depend on the nature, magnitude, location, and complexity of the transaction. It does provide previous clients a reduction on fees.
1031x
Exchange transactions might be challenging, but 1031x makes them simple with a flat, straightforward cost structure that makes it our top choice for the finest 1031 exchange firm overall.
Pros
- Simple and transparent fee structure
- Digitally delivered services and consultations for ease and effectiveness
- Specializes in complex transactions
Cons
- Lacks fidelity bond information or liability insurance on its website
Summary
Most people tend to find the 1031 exchange process to be burdensome. 1031x places a strong emphasis on process transparency to make sure that their clients are aware of every stage, including how they are being charged for services. In order to achieve this, 1031x provides a flat price structure, giving it the top rank in this category.
With more than $3 billion in transactions, 1031x, a 1031 exchange company founded in 1994, is one of the more well-known and prosperous ones. To give its customers an effective and smooth experience, the Denver-based business operates on a national scale while performing all services digitally. It doesn’t cut corners when it comes to experience or resources, giving each of its clients direct access to an exchange coordinator to streamline the procedure. Coordinators consult with participants via video conferences, although they are easily reachable by phone or email.
No of the kind, worth, or location of the property being exchanged, 1031x only charges $950 for both sides of the transaction. If each new property needs a separate closing, an extra $350 will be charged. Reverse exchange costs with no lender are $5,500.
To hold exchange funds in segregated accounts that can only be accessed with written permission, the company collaborates with reputable, FDIC-insured banks.
To securely manage escrow funds, 1031x collaborates with regional and international banks. Escrow accounts with FDIC insurance are used to separate funds.
Final Thoughts
If you want the overall best 1031 exchange company, IPX1031 is the way to go. While selecting the best company, it’s important to take into account aspects like the type of transaction or your tax status because the price structures of these businesses are all equivalent.
Best 1031 Exchange Companies
| Company | Price For Delayed Exchange | Money-Back Guarantee | 24/7 Support |
|---|---|---|---|
| IPX1031 Best Overall | Starts at $750 | No | No |
| First American Exchange Best Value | Starts at $600 | No | No |
| Exeter 1031 Exchange Services Best for Complex Exchanges | Starts at $850 + fees | Yes | Yes |
| Strategic Property Exchanges, LLC Best for Tax and Business Planning | Custom | No | No |
| Wells Fargo Best for Comprehensive Banking | Custom | No | No |
| 1031x Best for Simple Fee Structure | Flat fee by type of exchange | No | No |
FAQs
1031 Exchange: What Is It?
A 1031 exchange is a deal in which a real estate investor exchanges one “like-kind” property for another. When particular conditions are satisfied, this enables you to postpone paying capital gains taxes. One of the main requirements is that you have to find a replacement property within 45 days and buy it within 180 days of the original sale.
How Much Does A 1031 Exchange Cost?
The type, value, and location of the property all affect the 1031 exchange fees. For both parties to the transaction, they can be in the hundreds to thousands of dollars range. The more complex the transaction, the higher the charge. While some businesses set fixed prices, others offer quotes based on the services their customers want.
Are There Different Types Of 1031 Exchanges?
The majority of 1031 exchanges take the form of delayed exchanges, in which a licensed intermediary retains the sale proceeds of one property until the replacement property is fully acquired. Additional types include a build-to-suit exchange, when the sale profits are used to both acquire and improve a new property, or an improvement exchange, where the raw land on which a building is to be constructed is purchased. A reverse exchange, in which the replacement property is bought before the original property is sold, is the trickiest 1031 transaction.
Is A Lawyer Necessary For A 1031 Exchange?
To carry out a 1031 exchange properly, legal counsel is required. The transaction is intricate, and if you make any mistakes, the legal and tax repercussions might be severe. You are not allowed to touch the money from the initial property’s sale, according to IRS laws. Instead, a “certified intermediary” holds them. You cannot use an intermediary who has served as your employee, attorney, accountant, or real estate broker within the two years preceding the sale of the initial property.