“Contract Servicing” in a 1031 exchange refers to the act of managing the transaction between the buyer and seller in a 1031 exchange. The contract servicer acts as a facilitator and ensures that the exchange complies with the Internal Revenue Service (IRS) rules and regulations for 1031 exchanges.
Key-Takeaway
- Contract servicing is an important aspect of 1031 exchange transactions as it helps ensure compliance with IRS rules
- .A contract servicer acts as a facilitator and manages the transaction between the buyer and seller.
Example
A property owner wants to sell a rental property and purchase a replacement property using a 1031 exchange. The owner hires a contract servicer to manage the transaction and ensure that it complies with IRS rules.
Tips
- Choose a reputable and experienced contract servicer to manage your 1031 exchange transaction.
- Make sure to understand the fees and services provided by the contract servicer before hiring them.
Advice
- Seek the advice of a tax professional or real estate attorney before entering into a 1031 exchange transaction.
- Review the contract servicer’s terms and conditions carefully to avoid any misunderstandings.
Recommendations
- Use a contract servicer to help ensure that your 1031 exchange transaction complies with IRS rules and regulations.
- Consider using a contract servicer that specializes in 1031 exchanges to ensure a smooth and successful transaction.
