Internal Revenue Code Section 1031 encourages reinvestment in qualifying business and investment assets by enabling companies and individuals (exchangers) to reallocate their capital into new assets more suitable to their current business or investment objectives, without the imposition of income taxes.
Under Section 1031, a Forward Exchange allows exchangers to achieve substantial tax deferral on gains from the sale of property, when they also acquire like-kind property. A Forward Exchange may also defer the tax on depreciation “recapture,” which is taxed as ordinary income, rather than capital gains.
Section 1031 offers a “safe harbor” to exchangers that use a Qualified Intermediary (QI), such as NES Financial. A QI is an independent third-party that serves as the exchanger’s exchange counterparty and holds the exchanger’s funds during the period between the sale of the relinquished property and the purchase of the replacement property, so that the exchanger does not receive those funds and trigger taxable gains from the sale of the relinquished property.
NES Financial services
NES Financial offers an unsurpassed level of expertise and experience in conducting smooth and secure Forward Exchanges and works closely with clients and their advisers through every stage of the exchange. NES Financial’s comprehensive services include:
- Opening a new exchange account and working closely with clients and their advisers through every stage of the exchange
- Establishing a Qualified Escrow or Qualified Trust account to hold and protect the proceeds from the sale of the relinquished property
- Assisting with timely notifications of deadlines
- Persistent digital archive of executed exchange documentation
Click on the link below for more in-depth information about NES Financial’s Forward Exchange Solution:
- Forward Exchange Sheet > Download