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When investors seek to maximize their investments in real properties, they often turn to a 1031 exchange to reinvest the proceeds from selling a property (or business) in another "like-kind" property to maintain their investment position while avoiding current taxes on capital gains. But that's much easier said than done because exchanges executed under the strict guidelines of Section 1031 of the Internal Revenue Code can be complicated. Any missteps can be very costly, and there's no room for error.
That's the advantage of working with a reputable, full-service 1031 exchange company. Plus, they can usually be much less expensive than paying an attorney by the hour because of their scale. There are dozens of 1031 exchange companies—many are local, and others have national reach. The larger and more reputable companies have the established track record, expertise, resources, financial stability, and scale to provide superior services at reasonable prices. We reviewed the largest companies to narrow the list to the best 1031 exchange companies in six categories.
Best 1031 Exchange Companies of 2022
Best Overall : IPX1031
As a national leader in 1031 exchanges, IPX1031 has few peers when it comes to its national presence, track record, financial strength, specialization, and in-house expertise, making it our pick as the best overall 1031 exchange company.
Long track record of successful exchanges
Backed by the financial strength of a Fortune 500 title company
Separate national office for complex transactions
Expertise in local issues
Complete array of 1031 exchange services
Fees for complex exchanges are at the upper end of the price spectrum
IPX1031 was one of the first qualified intermediaries when it was founded in 1988. Since then, they have expanded their national presence to all major cities, conducting thousands of 1031 exchanges each year which is why it wins best overall. Backed by one of the largest title insurance companies, Fidelity National, IPX1031 has the financial heft to survive during the worst economic times.
What sets IPX1031 apart is that it maintains a separate national office that specializes in the more complex improvement and reverse exchange transactions, so clients know they're getting access to the best expertise in those critical exchanges. The firm has 35 offices across the country, and. The qualified intermediaries who staff regional offices are experts on state and local issues. As a subsidiary of a large title company, IPX1031 can also offer title services and full settlement services.
Fees for the various exchange services vary depending on the region and the type of exchange. The base fee for delayed exchanges ranges from $750 to $900, while a reverse exchange could cost upwards of $7,000 to $13,000 depending on the property value, location, and overall complexity. All fees are quoted individually after submitting an exchange request.
IPX1031 carries a $100 million fidelity bond, $30 million of errors and omissions insurance, and has a $50 million performance guarantee.
Best Value : First American Exchange
When choosing a 1031 exchange company, you need reliability, financial stability, fast processing, convenience, and a solid track record. First American Exchange Company has it all at a reasonable price, making it our choice as the best value in a 1031 exchange company.
Solid track record and strong reputation
Backed by the financial strength of one of the largest title companies in the U.S.
Exchange experts available for all states
Security measures, including bonding and liability coverage, not the strongest
First American Exchange is one of the more established 1031 exchange companies with a solid track record, a big plus in this field. It also offers the best in convenience, efficiency, reliability, security, and financial stability at very competitive prices, making it our choice as the best value in a 1031 exchange company.
First American is a direct subsidiary of First American Financial Corporation, one of the largest and most established providers of title insurance and settlement services. First American has a broad national reach with decades of experience processing successful exchanges.
First American offers delayed and reverse exchanges. With 1031 exchange experts available for clients in every state, they are intimately familiar with the laws specific to each state. Also, they are fully staffed with attorneys and accountants to assist investors with legal and tax matters. In addition to its exchange services, First American can offer title insurance and full settlement services for real estate and mortgage companies.
First American's fees are competitive, varying somewhat by region. Delayed exchange fees range from $600 to $1,800. For more complicated exchanges, like reverse and improvement, the fees are substantially higher and based on the transaction's complexity.
First American has all funds in segregated, FDIC-insured accounts, and it also holds a multimillion-dollar fidelity bond. It also indemnifies loss of funds that are in its control.
Best for Complex Exchanges : Exeter 1031 Exchange Services
Because Exeter 1031 Exchange Services has structured its company and resources to specifically support more complex exchanges such as reverse and improvement exchanges, it makes our list as the best 1031 exchange company for complex exchange transactions.
Expertise and structure to handle most complex transactions
Owns a separate trust company to fortify security measures
24/7 access to exchange coordinators
Most locations in western U.S., no offices on the East Coast
Exeter 1031 Exchange Services was founded in 2004 by long-time industry experts who know a thing or two about complex 1031 exchanges. While it offers a full array of exchange services, it has established a reputation for handling complex transactions competently and efficiently and stands by its services with a money-back guarantee. That's why we made Exeter our choice as the best 1031 exchange company for complex exchanges.
Exeter established several subsidiary companies to support its more sophisticated transactions to provide more efficiency and security for its clients' money. The Exeter Trust Company, which is regulated and audited by the Wyoming Division of Banking, was established to hold and safeguard client funds in segregated, dual-signature Qualified Trust Accounts while protecting their privacy. The trust company also serves as an IRA custodian for investors who want to have their real estate assets held in a self-directed IRA.
The company also added Exeter Asset Services to offer specialized services for structuring and administering reverse and improvement exchanges when legal title must be acquired and "parked" for reverse and build-to-suit transactions. The company also administers safe and non-safe harbor exchange strategies.
Exeter is the only 1031 exchange company on this list that offers 24/7 phone and email access to exchange coordinators. It's also the only company on the list that offers a money-back guarantee which promises to refund up to 100% of the exchange setup fee if clients are not completely satisfied.
Generally, its fee for a delayed exchange runs from $850 to $1,200 per transaction, along with a $300 to $400 administration fee.
In addition to securing its clients' funds in a qualified trust, Exeter carries a $5 million fidelity bond along with $5 million in errors and omissions coverage.
Best for Tax and Business Planning : Strategic Property Exchanges, LLC
Strategic Property Exchanges, LLC, promotes itself as a tax and business planning specialist for 1031 exchanges, and it has the experts, tools, and resources to back that up. That’s why it makes our list as the best 1031 exchange company for tax and business planning.
Extensive expertise and resources for planning tax and business strategies
Comprehensive offering of exchange services
Will provide tax opinions to support clients against IRS challenges
Strong security measures
Only two office locations
Does not publish pricing
In their own words, Strategic Property Exchanges (SPE) offers "total exchange management." They view a 1031 exchange not as a single transaction but as part of a comprehensive business strategy. With a full staff of board-certified tax and business experts, they have the expertise, tools, and resources to make that happen, making it our choice as the best 1031 exchange company for tax and business planning.
Founded in 1990, the company looks beyond the exchange transaction to the tax and business strategy implications for each of its clients to ensure they achieve their real estate investing objectives. Its team of tax and exchange experts helps clients in restructuring their real estate assets, entities, and partnerships to maximize tax benefits. It also owns a boutique law firm to handle all legal issues associated with transactions.
SPE guarantees its exchange transactions to ensure that its clients' exchanges are structured and carried out according to strict IRS guidelines. Through its law firm, SPE provides tax opinions to back up its strategies and protect clients from IRS challenges.
SPE offers all the common exchange services, but it provides specialty services for less common and more complicated exchanges, such as vacation or personal-use property, tenant in common, partnership, foreign-owned property, and overseas property exchanges.
The company maintains the security of funds by using dual-signature, segregated, FDIC-insured accounts. For deposits over $250,000, the company makes government-issued insurance available free of charge to cover 100% of the deposits. SPE also holds a fidelity bond and errors and omissions coverage.
Because of the extensive tax, legal, and business planning involved in its cases, each case is customized, meaning they also provide custom pricing.
Best for Comprehensive Banking Services : Wells Fargo
Wells Fargo is one of the few major banks to offer a commercial division with 1031 exchange services. Exchange clients also have access to full banking, financing, mortgage, and financial advisory services, making Wells Fargo our choice as the best 1031 exchange company for comprehensive banking services.
1031 exchange service has the financial backing of one of the largest financial institutes in the U.S.
Complete banking services to augment exchange service, including financing new properties
Deep expertise and support
Fees aren't published
Considerable number of customer complaints about banking services
Founded in 1852, Wells Fargo is one of the country's largest and most established financial institutions. It has an entire division staffed with qualified intermediaries devoted to performing 1031 exchanges. The advantage of working with a company like Wells Fargo is the ability to have all the banking services you might need for a 1031 exchange under one roof, including financing replacement properties.
Another advantage is its broad reach into most states, with localized expertise and access to services and support.
For its 1031 exchange services, Wells Fargo is fully bonded and carries liability and errors and omissions insurance. It adds an extra layer of security by housing exchange funds in in-house FDIC-insured accounts.
While it doesn't have the highest possible ratings from the rating agencies (A+ from Standard & Poor's, AA2 from Moody's, and AA from Fitch), the company is still considered to be strong financially. Wells Fargo has thousands of customer reviews on various sites, though not all positive. Wallet Hub gives it 3.8 out of 5 stars, and Bankrate gives it 3.2 stars. However, none of the negative reviews has anything to do with the bank's 1031 exchange services.
Wells Fargo 1031 exchange fees vary depending on the type, value, location, and complexity of the transaction and are quoted per request. It does offer discounted fees for its existing customers.
Best for Simple Fee Structure : 1031x
Exchange transactions can be complicated, but 1031x simplifies the process with a completely transparent, flat fee structure, making it our pick for the best 1031 exchange company for a simple fee structure.
Transparent and simple fee structure
Services and consultations handled digitally for convenience and efficiency
Specializes in complex transactions
Doesn't list fidelity bond amount or liability coverage on its website
The 1031 exchange process can be overwhelming for most people. 1031x emphasizes transparency in the process to ensure their clients understand every step, including how they are charged for services. To that end, 1031x offers a flat fee structure earning our top spot in this category.
Founded in 1994, 1031x is one of the more established and successful 1031 exchange companies, with more than $3 billion in transactions. The Denver-based company operates nationally but performs all services digitally to provide an efficient and seamless experience for its clients. It doesn't skimp on resources or expertise, lining up each of its clients with direct access to an exchange coordinator to facilitate the process. Coordinators conduct consultations through video conferences, but they can be contacted quickly and easily through phone or email.
1031x charges just $950 for both sides of an exchange transaction regardless of the property type, value, and location. It will add $350 for each additional property if it requires a separate closing. Fees for reverse exchanges are $5,500 with no lender.
The company partners with top-rated, FDIC-insured banks to hold exchange funds in segregated accounts that can only be accessed with written consent.
1031x partners with local and national banks to securely handle escrow funds. Funds are segregated in FDIC-insured escrow accounts.
The Bottom Line
1031 exchanges are among the most complex transactions real estate investors ever encounter, which is why selecting the right 1031 exchange company is so critical. Looking at this list, you can see that fee structures are all comparable, so it's essential to consider other factors in light of your particular circumstances.
For instance, if yours is a complex transaction, such as a reverse or improvement exchange, it is essential to work with a company specializing in them, such as Exeter 1031 Exchange Services.
Every 1031 exchange transaction involves banking services to handle funds. If you like the idea of having your transaction and banking services conducted under one roof, Wells Fargo is one of the few national banks that houses both.
1031 exchanges can have implications for taxes and business strategy. If you want to ensure you're optimizing your transaction for both, Strategic Property Exchanges, LLC, should be your choice.
If you just want the best overall 1031 exchange company, you can't go wrong with IPX1031. It is highly regarded, efficient, and financially stable with a solid track record.
|Company||Why We Chose It||Price for Delayed Exchange|
|IPX1031||Best Overall||Starting at $750|
|First American Exchange||Best Value||Starting at $600|
|Exeter 1031 Exchange Services||Best for Complex Exchanges||Starting at $850|
|Strategic Property Exchanges, LLC||Best for Tax and Business Planning||Customized pricing|
|Wells Fargo||Best for Comprehensive Banking Services||Customized pricing|
|1031x||Best for Simple Fee Structure||$1,000 flat fee|
Frequently Asked Questions
What Is a 1031 Exchange?
Generally, a 1031 exchange is a transaction in which a real estate investor swaps one property for another. The transaction is guided by Section 1031 of the Internal Revenue Code because the strategy is designed to allow investors to defer capital gains taxes when specific requirements are met. One of the key requirements is that the seller of a property must identify a replacement property within 45 days and complete the purchase of the replacement property within 180 days of the initial sale.
Rather than selling a property and incurring capital gains taxes, investors who want their investments to continue to grow can exchange it for another like-kind property. IRS rules for like-kind properties are relatively liberal, allowing different types of properties, such as an apartment building to be swapped with raw land. The provision also allows for the exchange of businesses and vacation homes. But the rules and requirements for specific exchanges can be complicated.
There are no limits on the number of exchanges an investor can make as long as all 1031 requirements are met.
How Much Does a 1031 Exchange Cost?
Generally, the fees for 1031 exchange services are reasonable considering the complexity of the transaction. Fees vary based on the property type, value, and location and, the more complex the transaction, the higher the fee. For example, the fee for a straightforward delayed exchange can range from $600 to $1,000 for both sides of the transaction. If more than one property is involved on either side of the transaction, you might pay an extra $350 per additional property. While some companies establish fixed fees, others quote fees based on customized services.
The fees jump considerably for more complex exchanges, such as reverse and improvement exchanges. These are typically customized transactions with fees starting at $5,000 to $6,000. Generally, the fees are all-inclusive, covering all services such as notary and fund transfers.
What Are the Different Types of 1031 Exchanges?
The bulk of 1031 exchanges are delayed exchanges, a reasonably straightforward transaction involving the sale of one or more properties. A qualified intermediary holds the proceeds of a sold property until the purchase is completed on a replacement property.
Other types of exchanges involve different types of property or processes for completing the transaction. For example, a build-to-suit exchange consists of purchasing raw land on which a building is to be constructed.
With an improvement exchange, the investor purchases a replacement property and uses part of the sale proceeds from the initial sale to improve the new property.
When it appears that the exchange transaction won't be completed within the required 180-day period, a more complex parking arrangement exchange is used to avoid the capital gains tax.
The most complicated transaction is a reverse exchange in which the replacement property is purchased before selling the initial property. The investor can first purchase a new property but must identify the property to be sold within 45 days and complete the sale within 180 days of the initial purchase.
Other types of transactions involve exchanging partnership interests (partnership exchange), business properties (multi-asset exchange), vacation properties (vacation or personal use property exchange), overseas properties (property owned overseas exchange), and properties in the U.S. owned by foreign nationals. The types of exchange can be more complicated, requiring specialized expertise to complete.
Do I Need a Lawyer for a 1031 Exchange?
Yes, you do need a lawyer to execute a 1031 exchange properly. The transaction can be extremely complex with significant legal and tax ramifications if you make any missteps. Plus, IRS regulations require that the investor does not touch the funds received from the sale of the initial property and that it instead be handled by a "qualified intermediary."
It's best to use a lawyer as the qualified intermediary—just not your lawyer. The IRS regulations further state that anyone who has acted as the investor's employee, attorney, accountant, or real estate broker within the two years leading up to the sale of the initial property is disqualified from acting as an intermediary for that investor. That includes anyone who is a member of the same firm as those individuals.
That's why all the top 1031 exchange companies employ or contract with lawyers who specialize in 1031 exchanges to act as qualified intermediaries.
How We Chose the Best 1031 Exchange Companies
1031 exchanges can be overly complicated with serious legal and tax ramifications if not conducted properly. We found that, for the most part, the fees charged by most of the top 1031 exchange companies are comparable. So, the focus on evaluating companies should be a company's reputation and track record, range of services offered, level of expertise, resources and support, the company's financial stability, regional or state expertise, and any specializations.
Based on these factors, we narrowed an initial list of the 15 most prominent 1031 exchange companies to the best in six categories.