Local 1031 Exchange intermediary "Atlas 1031 Exchange"

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Atlas 1031 Exchange Services is a nationwide Qualified Intermediary providing investment and personal property owners an Internal Revenue Service sanctioned "safe harbor" to defer capital gains tax by exchanging qualified, real or personal property for "like kind" property in accordance with Internal Revenue Code (IRC) Section 1031.

Since 2003, Atlas 1031 Exchange Services has been facilitating real and personal property exchanges for individuals and corporate entities owning investment property along the Emerald Coast including, Panama City, Seaside, Grayton Beach, Destin, Fort Walton Beach, Navarre, Gulf Breeze, Pensacola and Biloxi. Typically, our clients reside in Dallas, Houston, New Orleans, Mobile, Birmingham, St. Louis, Memphis, Nashville, Louisville, Indianapolis, Chattanooga, Atlanta, Jacksonville, Tallahassee, Orlando, Tampa or a seven hour driving radius from Destin or Florida Panhandle. Exchanges have been completed in: Florida, Alabama, Georgia, Mississippi, Louisiana, South Carolina, North Carolina, Virginia, Maryland, New York, New Jersey, Ohio, Indiana, Kentucky, Tennessee, Missouri, Colorado, Montana, Washington, Oregon, California, Nevada, New Mexico, Arizona and Hawaii. 

As an Accommodator, Atlas 1031 Exchange facilitates the exchange, holds the exchange proceeds in an interest bearing non co mingled escrow account and does not provide advice regarding specific tax consequences of 1031 tax deferred exchanges. Investors are encouraged to seek the council of their attorney and/or accountant.


1031 Exchange Mechanics


There are many types of exchanges including delayed, reverse, non safe harbor reverse, simultaneous, and build to suit/improvement. They share common timelines and procedures. 

Upon exchange property closing, exchange funds are deposited into an escrow account agreed upon by the Exchangor and Qualified Intermediary.

Within 45 calendar days of the exchange property closing, the Exchangor must provide in writing a legal description of the replacement properties to the Qualified Intermediary. This is called the Identification Period.

Within the earlier of 180 days following the closing of the exchange property or due date including extensions for the Exchangors tax return for the taxable year the transfer of the replacement property occurs.

Any transaction after October 16th or 17th (depending upon whether the year the tax return is due is a leap year) and the tax return is due April 15th, less than 180 days will be available to close on the replacement property unless a request for an extension is filed.

Types of Exchanges:

Delayed Exchange

A Delayed Exchange is when the replacement property closing occurs at a later date than the exchange or relinquished property closing.


11 Steps of a Delayed Exchange
1) The Exchangor signs a Purchase and Sale Agreement to sell the exchange (relinquished) property to buyer. Value of replacement property must be equal or greater value than the exchange property.

2) Exchangor engages Atlas 1031 Exchange Services, as Qualified Intermediary. Exchangor reviews and signs Engagement letter and Exchange Agreement.

3) An Assignment of Purchase and Sale Agreement assigns the rights of relinquished property to Atlas 1031 Exchange Services.

4) At the relinquished property closing ownership is transferred through a direct deed to buyer.

5) At the relinquished property closing, the exchange funds are wire transferred to an escrow account at a bank agreed upon by the Exchangor and Atlas 1031 Exchange Services, LLC.

6) Exchangor identifies replacement property in writing within a 45-day Identification Period. Exchangor has 180 days beginning on the closing of the relinquished property to purchase replacement property.

7) Exchangor signs Purchased and Sale Agreement to acquire the replacement property.

8) An Assignment of Purchase and Sale Agreement assigns the rights of the replacement property to Atlas 1031 Exchange Services.

9) At the replacement property closing the exchange funds are wire transferred from the escrow account.

10) At the replacement property closing ownership is transferred through a direct deed to the Exchangor.

11) At the end of the 180th day Exchange Period, all earned interest and remaining proceeds are sent to Exchangor along with an account summary.

Reverse Exchange

A Reverse Exchange is when the replacement property is closed before the relinquished property. Typically, Atlas 1031 Exchange Services  takes title to the replacement property and holds the title until the Exchangor can find a buyer for the relinquished property. An exchange accommodator titleholder is created as a sole purpose entity to hold the title. Once the relinquished property sale closes, the replacement property title is conveyed to the Exchangor.


Eight Steps to a Reverse Replacement Property Parked Exchange
1.  The Exchangor signs a Purchase and Sale Agreement to purchase the replacement property including a cooperation clause to the effect:

2.  Atlas 1031 Exchange Services acts as both qualified intermediary and Exchange Accommodator Titleholder (EAT).  The EAT will be created as a sole purpose entity to hold only the parked property. Exchangor will enter into a Qualified Exchange Accommodation Agreement (QEAA) that enables the EAT to purchase the replacement property. 

3.  The Exchangor secures a loan for the replacement property on behalf of the EAT.  A non recourse mortgage and Deed of Trust are signed by the EAT providing the Exchangor with a security interest in the property.  The Exchangor will sign a promissory note while the lender has first lien on the property. The EAT note to the Exchangor need not bear interest and none will be imputed. Be sure an assumption clause is in the Deed of Trust allowing Exchangor to assume the loan.  Residential lenders are reluctant to lend to an EAT limiting the availability of the replacement property parking to Exchangors who have cash or can secure loans from non-traditional lenders.

4.  If applicable, the EAT will lease the replacement property to the Exchangor during the parking period in a triple net lease. The Exchangor is responsible for all taxes, insurance and operating expenses. If mortgage payments are due, the Exchangor can pay these as additional rent to the EAT. The EAT reports these as rental income on EAT's tax return while the Exchangor deducts these as rent.

5.  From the closing of the replacement property, the Exchangor has 45 days to identify in writing the relinquished property and 180 days from the closing to complete the sale of the relinquished property. Similar Identification rules apply as with delayed exchanges.

6.  Exchangor signs a Purchase and Sale Agreement to sell the relinquished property that includes language to the affect:

"Seller is aware that Buyer has the option to qualify this transaction as an Internal Revenue Code Section 1031 tax deferred exchange. Buyer requests Seller's cooperation in the event of an exchange and agrees to the assignment of this contract to Atlas 1031 Exchange Services, LLC by the Buyer. Buyer agrees to hold the Seller harmless from any and all claims, liabilities and costs of such an exchange."

7.  Exchangor enters into a simultaneous exchange agreement with Atlas 1031 Exchange Services.  Atlas 1031 Exchange Services is assigned both the QEA Agreement and the Purchase and Sale Agreement for the relinquished property.

8.  At the closing, the Exchangor conveys the relinquished property to the Buyer by a direct deed for the purchase price. Atlas 1031 Exchange Services uses the exchange proceeds to pay the EAT the fixed price for the replacement property. The EAT pays off the mortgage to the Lender and any other financing on the replacement property, deeding the replacement property directly to the Exchangor

Non Safe Harbor Reverse Exchange

Revenue Procedure 2000-37 effective September, 15, 2000 provides a safe harbor for reverse exchanges meeting the requirements for both 180 day safe harbor and non safe harbor exchanges or extending beyond 180 days. Section 3, paragraph .02 of the procedure states the Service recognizes that parking transactions can be accomplished outside of the safe harbor provided in this revenue procedure. Accordingly, no inference is intended with respect to the federal income tax treatment of parking transactions that do not satisfy the terms of the safe harbor provided in this revenue procedure, whether entered into prior to or after the effective date of this revenue procedure. 

A replacement or relinquished property may be parked with the Exchange Accommodation Titleholder (EAT) up to 18 months and longer until the property is completed as in an improvement or construction then title is transferred from the EAT to the Exchangor. The Internal Revenue Service issued a Private Letter Ruling (PLR 200111025) approving a non safe harbor exchange where the parking period was 18 months. 

Non safe harbor exchanges are complex, entail more risk, require intensive planning, potential project management and triple net leasing options. They provide a viable strategy when the timeframe for the improvement or construction exceeds the traditional 180 day safe harbor. Exchangors are required to secure the counsel of their accountant and attorney when considering this strategy.


Build to Suit/Improvement Exchange

A Build to Suit/Improvement Exchange is when the Exchangor wishes to improve or schedule construction or repair on the replacement property. Improvements can be to raw land or to an established property in order to create equal or higher value than the exchange property. Once the Exchangor has title to the replacement property, further improvements or materials delivered but not constructed are ineligible for 1031 tax deferral.

Build to Suit and Improvement Exchanges require exchange agreements drafted in accordance with Revenue Procedure 2000-37. Similar to a reverse exchange, an Exchange Accommodator Titleholder must hold title to the replacement property using the exchange proceeds to purchase the replacement property and complete the improvements. This type of an exchange is different from a forward or delayed exchange and must be set up as a reverse prior to the first closing.


Simultaneous Exchange

A Simultaneous Exchange is when the relinquished property closing and the replacement property closing occur at same time on the same day at the same title company. Both the escrow and buy and sell agreements must reflect that the Seller and Buyer are initiating an exchange. 


Personal Property Exchange

Similar to real property, personal property held for investment or productive use in a trade or business may be exchanged for like kind personal property under Section 1031 of the Internal Revenue Code. The primary difference between real and personal property is the definition of like kind personal property is narrow where as for real property the definition is broad. 

Thirteen general asset classes provide the definition for like kind tangible personal property exchanges as described in Revenue Procedure 87-56, 1987-2 CB 674. Included in the asset classes are office furniture, information systems, airplanes, helicopters, automobiles, buses, light and heavy duty purpose trucks, railroad cars, locomotives, tractors, trailers, vessels, barges, tugs and industrial steam and electric generation and/or distribution systems. 

Property within a Product Class consists of depreciable tangible personal property that is listed in a 4-digit Product Class within Division D of the Standard Industrial Classification Codes, set forth in Executive Office of the President, Office of Management and Budget, Standard Industrial Classification Manual (1987) (SIC Manual) Reg Section 1.1031(a)-2(b)(3)

Examples of personal property exchanges outside of like class safe harbor held to be like kind property under Section 1031 include:

 Trades of major league sports contracts;
Noncurrency bullion type gold coins;
Gold bullion for Canadian maple leaf coins;
Chamber of Commerce memberships; and
Half blood heifers for three quarter blood heifers; livestock of different sexes are not like kind.