1031 Tax-Deferred Property Exchanges

1031 Exchange Process

• The exchanger enters into a purchase agreement and buyer agrees to cooperate in executing documents in order to effect a 1031 exchange.
• Once escrow is opened, the exchanger assigns its rights to City National Bank as their accommodator.
• Once escrow closes, the sale proceeds will be held in a segregated account and invested by City National Bank, until the exchanger requests that the funds be released toward the costs associated with the purchase of the replacement property.

Important Exchange Deadlines

Exchange Period: The exchanger must purchase the replacement property or properties within 180 days from the day after escrow closes on relinquished property, or by the due date of the exchanger’s tax return (including extensions), whichever occurs first.

Identification Period: The exchanger has 45 days from the day after escrow closes on the relinquished property to identify the replacement property or properties.

Qualifying For Complete Tax Deferral

In order to avoid payment of any taxes from the sale of the relinquished property, exchanger must do the following:

1. Purchase property(s) of equal or greater value.
2. Reinvest all the net equity in the replacement property.
3. Obtain equal or greater financing on the replacement property(s). Reminder: The exchanger can offset reduction in debt by investing the equivalent in cash into the replacement property(s).

About City National Bank’s Real Estate Group

City National’s Real Estate Group has been committed to satisfying the financial needs of real estate developers and investors since 1954. We provide financing for projects of all types and sizes. Our experienced relationship managers and our streamlined approval process result in service unparalleled in the industry. In addition, our on-site processing and servicing staff are dedicated to
meeting deadlines promptly and efficiently.

Getting Started

Discuss the 1031 deferred property exchange with your accountant and/or tax attorney. To learn more about how our Real Estate Group can help you, contact us or call (213) 673-8200.

City National Bank does not provide tax or legal advice regarding the tax consequence of a transaction. Investors considering an IRC Sec. 1031 tax deferred exchange should consult with their own tax advisor or attorney to obtain professional tax and legal advice.