Benchmark Title Company, LLC


1031 Exchanges - Part 1

John Howe


1031 Exchanges - Part 1

There have been times when the term 1031 Tax FREE Exchange has been used. That terminology is incorrect and misleading, the proper term is a 1031 Tax DEFERRED Exchange. As most every one is aware, there is no such thing as TAX FREE. When you sell property you must recognize gain or loss in that transaction, and if there is a gain you are subject to a tax on that gain.

The tax deferment advantage of this type of transaction has made the 1031 product popular in certain transactions. The 1031 program does not allow the use for primary residences, however in commercial or investment property transactions, there can be a definitive advantage. In all cases it is wise to consult your tax accountant and your attorney to advise you of the potential benefits, or if in fact there is a benefit, in relation to the cost of use of this process.

By deferring the capital gains tax in this process you effectively receive an interest free loan from the government in the amount you would have paid in taxes which has the same effect as increasing your equity in the transaction.

There must be at least two properties involved in the process, one you are selling (the “Relinquished Property”) and one you are purchasing. (The “Replacement Property”) They must be of “like kind”, such as in a trade or business a warehouse, office building, industrial space, etc., or for investment, raw land, rental property, apartment building. These properties are all like kind and they can be interchangeable in the 1031 process. Property that you own for personal use or vacation home does not qualify for a 1031 exchange.

The replacement property must be equal to or greater than the relinquished property in value, and the sale equity must be reinvested in the replacement property. In some cases you can re-invest a portion of the proceeds and take the balance in cash, however you will be taxed on the portion you take as cash.

There are other rules and requirements that must be met in order to make a 1031 Tax Deferred exchange meet the IRS requirements, which I will explain in a future Title Tip.

Benchmark Title acts as a “Qualified Intermediary” in order to assist you in this process, call our office for further information, or tune in next week for more on the “1031 Tax Deferred Exchange” process.

Any questions can be directed to Benchmark Title at 618-239-3750. Please feel free to call or email:  

John Howe

Doreen Miller, Esq.
Vice President and General Counsel

Michelle Null
VP Escrow Operations

Bethany Bond
Marketing Director

Serving you from three convenient locations:

Main Office:
1124 Hartman Lane
Shiloh, IL 62221
Ph: 618-239-3750
Escrow Fax: 618-239-3707
Title Fax: 618-239-3757
Fax Orders: 618-310-1589
President: John Howe

318 North Main St.
Columbia, IL 62236
Ph: 618-281-9700
Fax: 618-281-9705
Manager: Randi Schur

4215 S. State Rte 159
Glen Carbon, IL 62034
Ph: 618-288-1695
Fax: 618-288-1852
Manager: Sara Sowell

Benchmark Title is celebrating our 10 Year Anniversary!!!

With 10 years of the highest quality of service, & the most accurate product in the industry, we would like to say
Thank You for making us successful!!!!

Place your title orders on March 10th & March 21st and receive 10% off the title premium

Dates to Remember

March 15, 2008 - RASI Awards Banquet. 

March 26, 2008 - Ready, Set, Close! From Contract to Closing 9:00 am - 11:00 am  at the RASI Board Office. Contact RASI for information or to register.

March 28, 2008 - GGAR Annual Awards Banquet at Collinsville Gateway Center, Collinsville, IL
Reception 6 pm, Dinner 7 pm, Awards Presentation 8:30 pm, Comedian Mark Morfey 9:30 - 10 pm
$30 per person in advance, reservations required by March 12- Fax  to 618-692-8307 or Email to

June 6, 2008 - First Horizon Golf Tournament for Habitat for Humanity at Arlington Golf Course.  Contact Jamie Hollenkamp at 618-288-8656 or at

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