You must also take depreciation deductions on that return. This method is popular with investors looking to upgrade properties without paying taxes on proceeds. It means the exchange must be between two properties of equal or greater value, and the properties must be of the same type. This is. Keep in mind that one of the justifications for tax deferral is that a taxpayer has reported all the incidences of ownership and that the taxpayer’s basis will carry over into the new replacement. If the valuation of the replacement property is lower, an investor can settle the 1031 exchange by paying the difference between the properties' prices. The exchange of property for the same kind of property may qualify as a nontaxable exchange under section 1031 of the Internal Revenue Code. Commercial property is depreciated over 39 years. In line with our previous example, let’s say you sell an investment property for $500k, and you paid off a remaining $200,000 on the mortgage. The realized and recognized gain might seem similar at first, but those are different when it comes to taxation. Property Y: $300,000 / total replacement property value of $1,200,000 = 0. If you want to take some cash out of your relinquished property, you don’t have to roll over the entire sales proceeds into a like-kind. The three primary 1031 exchange rules to follow are: Replacement property should be of equal or greater value to the one being sold. All 1031 experts! I sold a condo in 2006 and used a 1031 exchange to buy a townhouse. Under IRC Section 1031, an exchanger or taxpayer executing a delayed exchange has 45 calendar days from the closing date of the sale of their relinquished property to formally identify a replacement property or properties. If each sale is conducted as a 1031 exchange, with all proceeds reinvested and all gains deferred, capital gains continue to be deferred indefinitely. published June 21, 2023. This is a common misconception: A 1031 exchange does not equate to tax-free gains. A standard 1031 exchange allows investors to defer capital gains taxes on the sale of an investment property, which provides tremendous tax savings for investors. When you can defer capital gains taxes, it allows you to grow. Named after section 1031 of the IRS code, it allows you to sell an investment and buy. Section 1031 sets specific time periods on the identification and receipts. 1 CNY = 0. It allows you to defer capital gains taxes when selling a property, as. The 1031 exchange calculation formula is simple but powerful. The accountant could suggest you embark on a 1031 exchange and roll over at least part of that gain into a like-kind property. I own a property outright that is 650k. Suppose that the couple purchases a replacement 1031 Exchange property for $3MM, but takes on $2MM in debt. " Completing a 1031 exchange allows you to defer the capital gains tax liability from your sale, but oftentimes, investors want to set aside a portion of their sales proceeds to boost their liquidity. Both the property transferred and the property received are held either. This internal revenue code allows anyone to defer capital gains taxes on the sale of their property. API’s national headquarters is in Roseville, CA. 1031 Exchange Alternatives if You Want to Back Out After Starting the Process Mar 21, 2022. ”. For your convenience we list current Boydton mortgage rates to help real estate investors estimate monthly loan payments & find local lenders. Using Section 121 and Section 1031 together. Therefore, there’s no financial gain to tax. In this case, you may contribute additional cash when you purchase your replacement property. Only the excess. However, investors can opt-out of two schedule depreciation and depreciate the calculated cost basis on a single schedule. According to Section 1031 of the U. IRC Section 1031 (a) (1) states as under : “No gain or loss shall be recognized on the exchange of real property held for productive use in a trade or business or for investment, if such real property is exchanged solely for real property of like-kind which is to be held either for productive use in a trade or business or for investment. We can assist you in complying with. Assuming on average a QI holds exchange funds for 120 days (120/365 = 3), their average 1031 funds on deposit is $80. 1031(a)-3 of the regulations, A determines that the section 1245 assets are real property for section 1031 like-kind exchange treatment. 1. Section 1031 has been around for more than a century, but Congress is giving it another look. This year we will sell the townhouse. As soon as you decide to conduct a 1031 exchange, be sure to tell any professionals you will be working with during the exchange (i. There was $700,000 of depreciation leftover at the time of the exchange (aka “carryover basis”). Get Your Copy. If you want to meet the conditions for a 1031 exchange, you much purchase a replacement property for at least $650,000. SECTION 121 + 1031 MIXED USE. For example, if you sell a property for $200,000 but only re-invest $180,000, the $20K difference is known as boot. -a. To receive full tax deferral. To pay no tax when executing a 1031 Exchange, you must purchase at least as much as you sell (Net Sale) AND you must use all of the cash received (Net Cash Received). Calculating the basis for the new (replacement) property in a 1031 exchange is simpler--the purchase price plus the commission paid. The Exchanger can quickly calculate whether there will be recognized gain based on the following principles: Taxable “boot” is defined as non-like-kind property the Exchanger may receive as part of an exchange. You must report all paid rent as rental income on your income tax returns. In such cases, the IRS typically requires you to allocate the property's value between the investment and personal use portions. Introduction to 1031 Exchange Calculation Formula. Let’s say Bill and Julie, a married couple who file their taxes jointly, bought their home many years ago for $100,000. While earlier interpretations of the section allowed investors to defer capital gains taxes on a range of investment assets, Congress restricted the definition to investment real estate in 2017. The Chartered Accountant conducting the tax audit is required to give his findings, observations, etc. 1031(a)-3 of the regulations, A determines that the section 1245 assets are real property for section 1031 like-kind exchange treatment. When an investment property is sold, the proceeds are transferred directly to the QI, which holds the funds in a secure. Advertisement. Many taxpayers want to know whether it’s a good time for them to sell their property or do a 1031 exchange. Defer the tax. Adjusted Basis of condo: $104000. dollars, the country’s official currency. A foreign exchange rate formula reflects the rate at which one currency can be exchanged for another. In addition, you need to borrow a minimum of $150,000 to pay for it. 2. On February 24, 2023, the IRS further extended those deadlines. If the names on the sale property and the exchange property are different, it won’t be accepted. Boot results from a difference in value between the original property, known as the relinquished property, and the replacement property. Just. Internal Revenue Code outlines the rules investors must follow to defer paying any capital gains tax due by selling (or. If the taxpayer sells her property, in order to get full tax deferral utilizing a 1031 Exchange, she will have to roll all of her net equity (a little less than $600,000 after closing costs, etc. how we make money. . The purpose of a 1031 exchange is to encourage active reinvestment in the. You choose to sell your current property with a $150,000 mortgage on it. Example: 1031 exchange that converts a primary residence to a rental property. As soon as you decide to conduct a 1031 exchange, be sure to tell any professionals you will be working with during the exchange (i. Adjusted basis of like-kind property surrendered. exchange achieves the tax deferral you want. . Capital gains tax is owed when you sell a non-inventory asset at a higher price than you paid resulting in a realized profit. The “1031” refers to the section of the Internal Revenue Code that permits such exchanges. Since you are likely conducting a 1031 exchange to defer payment of your capital gains tax, boot will counteract this benefit. It sells for $650,000. These final regulations address the definition of real property under section 1031 and also provide a rule addressing the receipt of personal property that is incidental to. This starts from the date of the sale of the relinquished property. A 1031 Exchange Delaware Statutory Trust (DST) is a legal entity created for the purpose of holding title to investment real estate. If you do wind up taking control of the cash at any. , 15 the Tax Court referred to the regulation as providing a safe harbor. The IRS generally considers real estate properties like -kind regardless of their quality or. My parents have a trust setup with both of them as managing members. Loan fees and loan. Completing a 1031 exchange in Florida requires adhering to specific time limits and identification rules. Another 1031 exchange can be used to defer the gain and recaptured on the. Mortgage boot in a partial 1031 exchange Mortgage boot is incurred when you fail to replace the value of the mortgage relief generated from the sale of the sold property. Those capital. e. 4167 = months Calculations: 65 days ÷ 30. Many factors are involved in calculating taxes, including factors. ”. 5 days Result: 180 hours is equal to 7. the $300,000 relinquished property gain minus $100,000 taxable boot. Property Y: $300,000 / total replacement property value of $1,200,000 = 0. Switching from a 1031 exchange to a QOZ fund continues the tax deferral, but only until the end of 2026, at which point that capital gains tax must be paid. To qualify for a 1031 exchange, the relinquished property and the replacement property must be “like-kind. The simplest type of 1031 exchange involves a simultaneous swap of one. A 1031 exchange, also known as a like-kind exchange, is a tax-deferral strategy used by real estate investors to defer capital gains taxes when selling and acquiring investment properties. Deferred exchanges are more complex but allow flexibility. Additionally, A determines that the total depreciation allowed or allowable on the section 1245 property is $50,000. To calculate the QI’s average 1031 funds on deposit, divide the aggregate dollar amount of exchanges obtained by Question 2. A 1031 exchange addendum is used to add any clarifying language to a 1031 exchange. Calculate the taxes you can defer when selling a property. The property owner has 45 days from selling their investment property to identify one or more like-kind properties they. The total new basis for the replacement property received would be the cost of the new property subtracting the gain deferred in the exchange. She wants to do a 1031 exchange into a $325,000 condo. It is also known as the taxable amount of the realized gain. Boot is a portion of the sales proceeds you receive from a 1031 exchange that isn’t re-invested in a replacement property. Depending the taxes, we may just to another 1031. Doing so is known as a like-kind exchange, which allows taxpayers to grow their investment on a tax-deferred basis. 8. “No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like kind, which is to be held either for productive use in a trade or business or for investment. Although not a complete list, the costs related to obtaining the loan should not be deducted from the proceeds. "washington state law, rcw 19. With the passage of the Tax Cuts & Jobs Act, only real property can now be exchanged for other like-kind real property. A 1031 exchange must be completed within a 180-day period. Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031. When the replacement property has a lower value than the sale price of the relinquished property, that difference is. Nearly every commercial real estate transaction involves a loan. What strategies do you use to identify and secure suitable replacement properties within the 45-day window in a 1031 exchange? Let's get a discussion . It is a short-chain primary fatty alcohol and a member of propan-1-ols. Let’s go through an example. “I sold one of my rental property and needed to perform 1031 exchange. Here’s the formula in code format: 1031 Exchange Value = Property Value - Exchange. Our intermediaries help clients throughout the state of Minnesota and around the country. For many, this is a popular – and effective – strategy through which to grow and diversify a real estate portfolio over time. C. Add the Closing Costs and Capital Improvement Costs for Your Real Estate. 3. Internal Revenue Code, is a way to postpone capital gains tax on the sale of a business or investment property by using the proceeds to. A taxpayer will also trigger taxes if they opt to receive some cash out at the closing of their relinquished property. 25. In a partial 1031 exchange, “boot” refers to any leftover sale proceeds subject to tax. A 1031 exchange can help you defer capital gains taxes on investment property, but the rules are complicated. A taxpayer can continue to exchange replacement property acquired through previous 1031 exchanges. 1031 Exchange Clause for Relinquished Property. Jeff’s company is a Qualified Intermediary for 1031 exchanges of real estate. A loan’s term is the amount of time that the borrower has to repay the principal balance. Fortunately, more and more property managers are. The 1031 exchange can be particularly helpful if you want. $300,000 acquisition cost less $125,000 deferred gains = new basis of $175,000. Failure to use a QI can result in missteps, causing the disqualification of the exchange and the. This might be obvious, but it’s worth noting: in a 1031 exchange, both the property being sold/exchanged and the property being bought need to be purchased by the same party. For example, let’s say the adjusted cost basis for a single-family home you bought five years ago is $85,000 . Give our qualified intermediaries a call today to get your 1031 exchange off the ground. Cover Strategy. Say you bought a beach house for $100,000 and sold it for $1 million. The IRS defines like-kind properties as having the same nature or character, even if they differ in grade or. The new property that is received in the Sec. A 1031 exchange is a popular tool for commercial real estate investors to defer paying capital gains tax. Buying 1031 Exchange Replacement Property from a Related Person Mar 14, 2022. Option 1: Separate depreciation schedules. Total new basis: $515,000 - $101,029 = $413,971. Many factors are involved in calculating taxes, including factors unique to each taxpayer. (2) Based on amount of depreciation taken during ownership of the property. Includes state taxes and depreciation. Call them today! 503-635-1031. A 1031 exchange is a transaction that allows real estate investors to sell one property and purchase another similar property without paying capital gains taxes on the sale of the first property. A 1031 exchange, also called like-kind exchange, refers to the Internal Revenue Service tax code Section 1031. The Taxpayer that Sold and Acquired the Exchange Property Must be the Same. 8. Get Your Copy. A 1031 exchange enables real estate investors to defer tax liabilities on the sale of an investment property by reinvesting the. §1. When 1031 Exchanges originated over 100 years ago, it was necessary for the Seller and Buyer to literally exchange the two associated properties - a lot has changed since that time. Increased Buying Power. Costs associated with a 1031 transaction may impact investor's returns and may outweigh the tax benefits. The QI instructs the person preparing the transfer deed to directly deed the property from the taxpayer to the buyer; however, the QI directly receives the funds from the closing of the sale. Asher joined the Accruit team in 2012. , your attorney, your real estate agent, etc. Section 1031 of the U. Take 400k to buy an investment property while taking advantage of the 250k tax exemption on capital gains for primary. These calculations are estimates for the purpose of demonstration. When it comes to buying and selling real estate, timing is everything. Regs. Formula for basis of like-kind property received. But, the scope of the program was limited starting January 1, 2018, to only include business. Under the Three Property Rule the exchanger may identify up to three properties, regardless of value, as long as. The new property that is received in the Sec. It is possible to have little or no equity or profit upon a sale and still owe capital gains taxes. A 1031 exchange, named after section 1031 of the U. The capital gain tax on appreciation in value goes up from 15% to 20% when “Taxable Income” exceeds $492,301 (single) or $553,851 (married filing jointly). The IRS's strict timing rules can make a 1031 exchange for new construction a risky venture. Do know that 1031 exchanges aren’t just for investment real estate. In the first scenario described above, the married couple is able to take their $1. It allows you to replace one investment or business property with a like-kind property and defer the capital gains on the sale if Internal Revenue Service (IRS) rules are meticulously followed. Last reply by. The buyer has more flexibility with acquiring the property since they are. And, the loan’s parameters can be customized to meet the unique needs of the transaction. It sells for $650,000. Worksheet April 17, 2018. Learn how to complete a partial 1031 exchange. The property must be rented out to another person for more than 14 years of the 12-month period after the exchange. Founded in 1990, Asset Preservation, Inc. Includes the IRS safe harbor guidelines using a qualified intermediary. It was coming from reputable online resource and that we like it. This sounds like they need to be similar in type, but the IRS defines like-kind broadly. The first property—the one your client is selling—is known as the Relinquished Property, and the like-kind. A taxable event triggers a tax liability calculation, which is the tax. Under the Tax Cuts and Jobs Act, Section 1031 now applies only to exchanges of real property and not to exchanges of personal or intangible property. Normally, when a taxpayer sells property, gain or loss on the sale is recognized in the tax year in which the sale occurs. This then leaves you with a recognized gain of $50,000. 1031(d)-1(e) says that the basis of the replacement property acquired must be increased This leaves you with $130,000 of capital gains to defer. 1 Vote 11 Replies. A Guide to 1031 Exchanges. . The 1031 Exchange Worksheet is often used in financial and accounting applications, because it allows users to import or export data from one format to. A like-kind exchange under United States tax law, also known as a 1031 exchange, is a transaction or series of transactions that allows for the disposal of an asset and the acquisition of another replacement asset without generating a current tax liability from the sale of the first asset. 1031 refers to section 1031 of Internal Revenue Code. 400 W. 1031 Learn with flashcards, games, and more — for free. In Peabody Natural Resources Co . 3. Many of those rules—such as the following—are specific to replacement. It states that none of the realized gain or loss will be recognized at the time of the exchange. Task: Convert 180 hours to days (show work) Formula: hours ÷ 24 = days Calculations: 180 hours ÷ 24 = 7. A 1031 exchange let’s you defer your capital gains taxes on the sale of real estate. The basic rule of a 1031 exchange is that taxpayers can defer taxes on the sale of property by reinvesting those proceeds from the sale into a like-kind. For starters, we’ll add detail to our earlier reference to the. All three steps must be completed for the tax return to contain the correct information. That’s $900,000 in capital gains. We tried to find some amazing references about 1031 Like Kind Exchange Worksheet And Form 8824 Worksheet Template for you. Exeter 1031 Exchange Services, LLC 402 West Broadway, Suite 400, San Diego, California 92101 Office: (619) 239 -3091 • Facsimile: (866) 393-8371 • Web site: San Diego • Newport Beach • Los Angeles • Fresno • San Francisco Pennsylvania • Chicago • New York • New Jersey • Delaware • Hawaii. A like-kind exchange, or 1031 exchange, can only be completed for real property. Your replacement has a $700,000 basis, also debt free. Learn how to complete a partial 1031 exchange. +Adjusted basis of boot given. TAXES DUE (Effective Tax Rate)4. Generally, income earned in your business on a regular basis. A 1031 exchange allows you to defer the tax on the capital gain from the sale of your property. 1245(b)(4) recapture. Reverse Exchange: A type of property exchange wherein the replacement property is acquired first, and then the current property is traded away. If you sold an investment property for $1 million but identified a replacement property that was only worth $800,000, you could keep the. Identify the eligible property. We don't think 1031 exchange investing should be so difficult. They have decided that paying the tax is worth it to free up the cash. The closing process can be messy but they did a good job communicating with me, seller attorney, settlement agent. A taxpayer can continue to exchange replacement property acquired through previous 1031 exchanges. Hours to Days Conversion Chart. S. Investors can lose over 37% of their capital gains to taxes. Our primary office is located in downtown Minneapolis, but we work with clients throughout the country. One crucial aspect of a successful 1031 exchange is calculating the exchange basis accurately. The calculator for adjusted basis in real estate is not just for computing capital gains of the real estate sale but can be used for calculating capital gains on the sale or transfer of all kinds of capital. Section 1031 Exchange Worksheet And Like Kind Exchange Formula; If you’re just using standard excel, then this worksheet is easy to use. Jen owns a $300,000 investment property free and clear. Construction delays are common, and if the property is not completed and acquired within the 180-day window, the exchange can fail, resulting in hefty tax liabilities. The six major rules governing 1031 exchanges are: 1. -Loss recognized. Key Takeaways. Realized gain, though, is the total value of your profit after you subtract any associated costs and the basis from the profit you made selling the asset. In a nutshell, section 1031 allows youPros of 1031 Exchanges: 1. Section 1031 (a) of the Internal Revenue Code ( 26 U. Step 1: Disposing of the original assetThe Biden Administration has proposed limiting Section 1031 like-kind exchange deferral to a maximum of $500,000 (single taxpayer) / $1 million (married taxpayers) in the budget for FY2024. So you can’t use your real estate broker or agent or a relative to facilitate the. A Guide to 1031 Exchanges. Sec. . (3) Rate varies by state. Apportionment generally refers to the division of business income among states by the use of an apportionment formula. Internal Revenue Service’s tax code. If you’re planning a trip to the United States, you may want to exchange some of your money into U. A 1031 exchange comes from Section 1031 of the U. The boot refers to the difference in price if you use the 1031 exchange to buy a property worth less than the one you’re selling. The main reason for conducting a 1031 exchange is to defer the payment of capital gains tax. IPX1031 focuses solely on Tax Deferred Exchanges. The 1031 exchange refers to the use of section 1031 of the United States Internal Revenue Code (26 U. 1) You don't mind paying taxes. The first law of thermodynamics can be captured in the following equation, which states that the energy of the universe is constant. To qualify as a Section 1031 exchange, a deferred exchange must be distinguished from the case Suppose that the couple purchases a replacement 1031 Exchange property for $3MM, but takes on $2MM in debt. However, investors can opt-out of two schedule depreciation and depreciate the calculated cost basis on a single schedule. S. It sells for $650,000. They also can exchange. See here for more details. An exchange rate is a fundamental concept in international finance that determines the value of one country’s currency in terms of another country’s currency. Assume you have a prize steer that you sell in a 1031 Exchange for $20,000 and you buy a new steer for $20,000. If you take cash. Yes, it’s possible to use a 1031 exchange to start a business. A 1031 exchange is one of the most powerful remaining tax deferral strategies. e. The boot is subject to capital gains tax. If you decide to move forward, do so with the understanding that the IRS will likely examine the transaction to confirm that all the rules and guidelines have been followed. 25 * total deferred gains of $500,000 = $125,000. Image: A quick flowchart showing how a 1031 exchange works. The primary purpose of a 1031 exchange is to encourage investment in real estate by. There are two ways to depreciate real estate post 1031 Exchange. A like-kind exchange consists of three main steps. capital gains and depreciation recapture taxes apply to the $120,000 gain ($585,000 minus $465,000 cost basis). If you want to meet the. Choose a qualified intermediary to coordinate the exchange. “It should be noted that a 1031. Requires only 10 inputs into a simple Excel spreadsheet. Do’s. The Exchanger can quickly calculate whether there will be recognized gain based on the following principles: Taxable “boot” is defined as non. Converting rental property acquired in a 1031 exchange to a primary residence blends Section 1031 with Section 121 that provides the $250,000/$500,000 exclusions. Key Takeaways. Having exchanged your $800,000 property for a $700,000 asset, cash boot of $100,000 is realized. Benefits Of A 1031 Exchange. Generally speaking, an Institutional Qualified Intermediary charges ~$1,500 in administrative fees for a 1031 exchange that involves one “relinquished property (the old one)” and one “replacement property (the new one). Section 121: Tax exclusion applies to a primary residence where the property has been used as a main residence for at least two of the past five years. How 1031 Exchanges Work + Examples. To this day, many tax experts refer to Section 1031 transactions as “Starker exchanges. 115-97, amended Sec. While this might seem straightforward, this assumption might be misleading as. 86 % during June 2015 to June 2019. A 1031 exchange is a tax management tool that allows investors to defer the realization of capital gains taxes when they sell an investment property. For comparison, a conventional delayed 1031 exchange costs around $1,000. Maximize your gain. If you do, the IRS may choose to challenge it. Free, simple 1031 Exchange Capital Gains Calculator to help you estimate and calculate the reinvestment requirements for a tax-free exchange. Like-Kind Exchange Depreciation Options Like-Kind Property: Any two assets or properties that are considered to be the same type, making an exchange between them tax free . 1031 Exchange — Trade, Business or Investment Property. This amount can range anywhere from 15-20% of the sale price, with an additional surtax of up to 3. Conclusion. The three primary 1031 exchange rules to follow are: Replacement property should be of equal or greater value to the one being sold. For instance, if you have a property with a combined land and structure cost basis of $150,000. ”. Tax-deferred doesn't mean tax-free. (TCO 11) If boot is received in a § 1031 like-kind exchange and gain is recognized, then which formula correctly calculates the basis for the like-kind property received? (Points : 2) Adjusted basis of like-kind property surrendered + gain recognized - fair market value of boot received Fair market value of like-kind property. (A) The exchange group consists of real estate A, real estate B, and real estate R. If you're like a lot of real estate investors you are real estate rich and cash poor. 4167 = 2. Regs. Real Estate Broker. Exeter 1031 Exchange Services, LLC 402 West Broadway, Suite 400, San Diego, California 92101 Office: (619) 239 -3091 • Facsimile: (866) 393-8371 • Web site: Suppose you are a real estate investor. When you sell an investment property, you are disposing of a tangible asset that the IRS classifies as “real property. " Internal Revenue Code Section 1031 (i. The basis for the new asset. Credit reports. Code § 1031 – “Exchange of Real Property Held for Productive Use or Investment. If you want to meet the conditions for a 1031 exchange, you much. ”. With a 1031 Exchange, you can defer, reduce, and even eliminate paying taxes. IPX1031, in conjunction with our trade association, the Federation of Exchange Accommodators (FEA), have built a strong defense with the 1031 real estate. The basic steps involved in a 1031 exchange are: The property owner sells the existing property, known as the relinquished property, and identifies a. Internal Revenue Code (IRC) Section 1031 states that any exchange of properties of similar use can be exempt from most taxes. In this article, we are going to talk about how to know if it’s a good time for you to do a 1031 exchange. How to Convert USD to INR. 1031 exchange is purchased for $1,500,000. To qualify for a 1031 exchange, the funds must be held by a qualified intermediary, such as e1031xchange, and an exchange agreement must be signed. Exchange rates play a crucial role in global. CONNECT WITH A TOP-RATED EXPERT. The gain, not the profit or equity, from the sale of the investment property is subject to a combination of capital gains taxes, Medicare tax, and the tax on the recapture of depreciation. IPX1031® Essentials. The enactment of the law known as the Tax Cuts and Jobs Act (TCJA), P. 1 Like-kind exchanges accounted for approximately 10 to 20 percent of all real estate transactions in that time frame. The 1031 Exchange Equation. The excess liabilities assumed of $7000 is allocated to the exchange group. Purchase and Sales Contract Wording - Optional 1031 language you can use in the contract for both your Old and New Property. The role that debt plays in an exchange is probably one of the most misunderstood areas of 1031 law. (API) is one of the largest and most experienced 1031 exchange companies in the U. L. When engaging in complex financial transactions.