Hidden dangers in 1031 exchanges

The November 2008 bankruptcy filing of leading 1031 exchange accommodator LandAmerica should alert all real estate investors to the real perils regarding what firm they choose for handling their 1031 exchange and holding their funds. 1031 exchange accommodators, also known as qualified intermediaries, hold funds in escrow from real estate investors who have sold a property at a profit and have 180 days to close on the purchase of a replacement property (which must be identified within 45 days of the sale of the original property) in order to defer capital gains tax on the profits.

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