What does Coast 1031 do?
Coast 1031 does not act as the real estate broker, escrow agent or attorney. The investor can use anyone he wishes to fulfill these roles. As the Qualified Intermediary, Coast 1031 acts as the seller of the Relinquished Property and buyer of the Replacement Property. This is done through the use of contractual assignments
How does this constitute an Exchange?
Since Coast 1031 acts as the seller and buyer on behalf of the investor, the IRS considers the investor to have merely exchanged properties. Because it is an exchange, the capital gains taxes that would ordinarily be due on the sale of the relinquished property are deferred. As long as the investor doesn’t make a regular sale of the property, the capital gains taxes will not have to be paid. Not only that, he can keep exchanging the property throughout his lifetime with the same benefit. As part of its role as Qualified Intermediary, Coast 1031 consults with the investor, structures the Exchange, and prepares all of the legal paperwork to convert the transaction from a taxable sale into a tax deferred 1031 Exchange.