What is a tax-deferred exchange?

A process that allows a taxpayer to exchange an investment or business property and defer payment of the capital gains tax. There is normally a delay between the settlement of the property being relinquished and the settlement of the replacement property, which is what the qualified intermediary structure is designed to bridge.

What are the criteria for a deferred exchange?

The properties must be like-kind, meaning the relinquished property is currently used as investment or business property; how the buyer intends to use it does not matter. The replacement property must be identified within 45 days, can be anywhere in the United States, must settle within 180 days, and must be used by the exchanger as investment or business property.

How did the 2018 tax reform change 1031 exchanges?

Real property exchanges were retained, which the firm credits to work by the Federation of Exchange Accommodators and its members. Personal property such as equipment, trucks and art, and intangibles such as franchise rights and collectibles, were removed from section 1031; personal property instead used 100% bonus depreciation from 1 January 2018.

1031 exchange QIs

Realty Exchange Corporation

Realty Exchange Corporation is a qualified intermediary in Gainesville, Virginia. Since it was founded in 1990 its sole business has been providing qualified intermediary service to real property investors and their advisors for 1031 tax-deferred exchanges, and it describes itself as a family-owned and operated firm and the largest exclusive intermediary in the Mid-Atlantic region.

The firm says it has helped clients with straightforward, simultaneous, reverse and improvement exchanges, as well as equipment, oil and gas exchanges before personal property was removed from section 1031. Alongside the transactional work it publishes free reference material: 1031 basics, key rules, the exchange steps, the underlying law and Form 8824 guidance, plus guides, videos, classes and a blog.

Escrow handling is the part of the service the firm documents most closely, under a program it calls AlwaysSafe. Each exchange gets a separate segregated bank account in the exchanger's own name and tax identification number at an FDIC-insured bank, with 24/7 online viewing of that account by request, a monthly bank statement per exchange account, client authorization required to transfer funds, daily validation of every escrow deposit and disbursement, monthly audits of all escrow accounts and individual registers per account. The firm also carries errors and omissions insurance, is a member of the Federation of Exchange Accommodators and says it follows the FEA Code of Ethics, with multiple Certified Exchange Specialists on staff.

Fees are not published. The firm says its fees are kept competitive with the industry, that the banks pay interest on funds held in escrow, and that a price quote comes from the office. Its address is 7400 Heritage Village Plaza, #102, Gainesville, VA 20155, and it notes a Washington State advisory on the site, so out-of-region investors should confirm coverage.

Best for

Investors and their advisors who want a family-run qualified intermediary with individually titled, segregated escrow accounts, particularly in the Mid-Atlantic. Fees are quoted by phone, so ask for a price up front.

What they do

Forward (delayed) 1031 exchanges
Simultaneous exchanges
Reverse exchanges
Improvement and build-to-suit exchanges
Segregated escrow account administration
1031 education, guides and classes
Form 8824 reference material

Details

Attribute	Value
Founded	1990
Ownership	Private
Memberships	Federation of Exchange Accommodators (FEA) member, Certified Exchange Specialists (CES) on staff
How they charge	Fees are not published; the firm quotes by phone and says banks pay interest on funds held in escrow.
Exchange types	Forward, Reverse, Improvement
Fund security	Segregated accounts

What stands out

Founded in 1990, with qualified intermediary service for 1031 exchanges as its only line of business.
Describes itself as the largest exclusive intermediary in the Mid-Atlantic region and says it has facilitated tens of thousands of exchanges.
Each exchange gets a separate segregated FDIC-insured bank account in the exchanger's own name and tax identification number.
Member of the Federation of Exchange Accommodators, follows its Code of Ethics, and has multiple Certified Exchange Specialists on staff.
Escrow controls include monthly bank statements, daily validation of each deposit and disbursement, and monthly audits of all escrow accounts.

Common questions

What is a tax-deferred exchange?: A process that allows a taxpayer to exchange an investment or business property and defer payment of the capital gains tax. There is normally a delay between the settlement of the property being relinquished and the settlement of the replacement property, which is what the qualified intermediary structure is designed to bridge.
What are the criteria for a deferred exchange?: The properties must be like-kind, meaning the relinquished property is currently used as investment or business property; how the buyer intends to use it does not matter. The replacement property must be identified within 45 days, can be anywhere in the United States, must settle within 180 days, and must be used by the exchanger as investment or business property.
How did the 2018 tax reform change 1031 exchanges?: Real property exchanges were retained, which the firm credits to work by the Federation of Exchange Accommodators and its members. Personal property such as equipment, trucks and art, and intangibles such as franchise rights and collectibles, were removed from section 1031; personal property instead used 100% bonus depreciation from 1 January 2018.