Therefore, you should do your due diligence and consider the following factors before hiring one:
- Experience: You want a 1031 exchange advisor who has a proven track record of successfully handling 1031 exchanges for clients with similar goals and situations as yours. You should ask them how many 1031 exchanges they have completed, what types of properties and transactions they have dealt with, and what challenges they have faced and overcome.
- Qualifications: You want a 1031 exchange advisor who has the necessary credentials and certifications to demonstrate their competence and credibility. You should verify that they are licensed and registered in your state, that they have no disciplinary actions or complaints against them, and that they have relevant education and training in real estate and tax law.
- Reputation: You want a 1031 exchange advisor who has a good reputation in the industry and among their peers and clients. You should check their online reviews, testimonials, and referrals, and ask them for references that you can contact and verify. You should also look for any awards, recognitions, or memberships that they have received or belong to.
- Communication: You want a 1031 exchange advisor who can communicate clearly, effectively, and promptly with you throughout the exchange process. You should ask them how they will keep you informed, how often they will update you, and how they will respond to your questions and concerns. You should also assess their personality, style, and rapport, and see if they are compatible with yours.
- Fees: You want a 1031 exchange advisor who can provide you with a transparent and reasonable fee structure that matches the value and quality of their services. You should ask them how they charge, what they charge, and what they include and exclude in their fees. You should also compare their fees with other 1031 exchange advisors and see if they are competitive and fair.
Conclusion
A 1031 exchange is a powerful tax strategy that can help you defer taxes and diversify your portfolio when selling and buying properties. However, it is also a complex and challenging process that requires the guidance and assistance of a 1031 exchange advisor, a professional who can help you navigate the 1031 exchange process, identify suitable replacement properties, manage the strict deadlines, ensure compliance with IRS rules, and prepare the necessary documentation.
