1031 Exchange in Arizona – The Authoritative Guide to Rules, Exchange Companies, Requirements and More

Last updated on April 3rd, 2020 at 09:34 pm

1031 exchange in arizona can save thousands in taxes

Arizona is more than just retirees, golf courses, and great February weather. It’s also one of the hottest real estate markets in the country. Employers are attracted to Phoenix, Tucson, and Flagstaff’s vibrant and educated workforce, and business-friendly climate.

If you own property in Arizona, you’re likely very happy with your purchase. Due to the number of employers moving into the state, property values have increased dramatically. When it comes time to sell, this means you could face a large tax bill. Especially if you have taken a lot of depreciation that the IRS now needs to “recapture”, your tax bill could be tens or hundreds of thousands.

arizona 1031 exchange road,delay taxes forever

What if you could defer paying taxes, potentially forever? This is what a 1031 exchange in Arizona can do, and many real estate investors are taking advantage. The 1031 exchange, also called a Starker Exchange or Like-Kind exchange, is the last great tax benefit available. Many property owners in Arizona are “taking chips off the table” without incurring a huge tax bill.

That said, a 1031 exchange in Arizona requires preparation, knowledge, and trust. Choosing a qualified intermediary is not an easy task. You also have to consider Arizona-specific rules for the 1031. After you’ve sold your property, what should you buy with the proceeds? This article will cover all of that, and more.

First, we’ll walk through the 1031 exchange basics. Then we’ll explain how Arizona 1031 exchange rules are different than other states. After that, we’ll review the best 1031 exchange companies in Arizona. Then, we’ll finish with some options for your replacement properties.

Rules for 1031 Exchange in Arizona

Before we get to Arizona-specific rules, we’ll start with a recap of the 1031 exchange. If you’re already a 1031 expert, feel free to skip down to our reviews of the best 1031 exchange companies in Arizona. There, we’ve vetted the top qualified intermediaries for your Arizona exchange.

1031 Exchange in Arizona Basics

The 1031 exchange is part of the IRS tax code, and allows you to exchange investment or business real estate for a “like-kind” asset. When a property has appreciated in value, you would normally have to pay capital gains tax if you sell the property. Also, if you take depreciation, the IRS levies a tax known as depreciation recapture. This is taxed at an even higher rate of 25%.

Since the late 1980s, investors have been using section 1031 of the IRC tax code to defer these taxes. The benefits of a 1031 exchange are enormous. Many investors have made fortunes by continually deferring taxes. The best part is that you can do 1031 exchanges until you die. After that, your heirs will inherit properties on a “step-up” basis.

There are many rules you have to follow in order for the exchange to be allowed, but there are seven main points to keep in mind:

  • The replacement property must be like-kind
  • Both old and new property must be for “productive use in a trade or business”
  • The new property must be equal or greater value. Also, the mortgage debt of the new property cannot be less than the mortgage debt of the old property
  • You cannot receive “boot
  • The same person or group must sell the old property and take title to the new one
  • After the initial sale, you must identify up to three potential replacement properties within the 45-day identification period
  • After the properties are identified, you must close on one of them within 180 days

1031 Exchange in Arizona Rules

Unlike states such as California, Colorado, and Washington, Arizona does not have state-specific rules for the 1031 exchange in Arizona. That said, a qualified intermediary is still necessary to ensuring your exchange does not fail.

If you own a vacation property or second home in Arizona, you may be wondering if you can do a 1031 exchange in Arizona and sell it. As long as you or friends/family have not used the property for more than 14 days each year, it still counts as an investment property. If you’re unsure about whether you qualify or not, get in touch with a 1031 exchange company or accountant.

Below, we’ve vetted the top 1031 exchange facilitators in the state of Arizona. While these specialists are not a lawyer, accountant, or CPA, they will be able to help tremendously.

Best 1031 Exchange Companies in Arizona

Arizona has a number of qualified intermediaries that either cover the state or are physically located in the state. If you have a very complex transaction, it may be best to find someone local. This way, you can present documents or whiteboard concepts in their office.

We’ve spoken with investors and industry experts to compile this list of the best 1031 exchange companies in Arizona. If you’re looking for a quote, click here.

Investment Property Exchange Services – IPX 1031 Arizona

ipx one of the best 1031 exchange in arizona companies

IPX is one of the largest 1031 exchange companies in the United States. They have three separate offices in the state of Arizona alone, covering most parts of the state. Originally founded in the 1980s as one of the first groups of qualified intermediaries, they have grown their nationwide presence immensely.

Also, they’re a subsidiary of Fidelity National Financial, one of the largest real estate services firms in the country. This gives you assurance that even in the face of a catastrophic event, IPX is here to stay.

Services IPX Offers

The Arizona IPX team has decades of experience conducting 1031 exchanges. They can help with nearly any type of 1031 exchange, from the simple to the most complex. These types of 1031’s include:

  • Delayed 1031 Exchange (Also called the forward exchange)
  • Reverse 1031 Exchange
  • Improvement 1031 Exchange (Also called construction or build-to-suit exchange)
  • Simultaneous 1031 Exchange (Very rare, difficult to pull off)

IPX Experience and Financial Stability

IPX 1031’s team does thousands of exchanges each year, and their Arizona team is especially skilled. Most of their staff has been in the 1031 industry since it began, which means they’ve seen most situations before.

Additionally, a large portion of the qualified intermediaries are also attorneys. This helps if you need legal advice, as a qualified intermediary is not technically allowed to give this. Moreover, most of their advisors are part of the Federation of Exchange Accommodators, and many hold the designation Certified Exchange Specialist. This title requires a qualified intermediary to take an in-depth test about their knowledge of the 1031 exchange in Arizona.

Like other top 1031 exchange companies, IPX 1031 has tons of bonding and insurance policies. They have a fidelity bond totaling $100M, which is industry-leading. Next, they hold a $30M errors and omissions coverage, which should help assure you that any issues will be covered. Last, IPX has a $50M performance guaranty. This ensures that any deposit is returned when you’re ready to withdraw your funds.

IPX 1031 Locations and Customer Service

IPX has the most locations in Arizona of any 1031 exchange company. They have three qualified intermediaries with three separate offices throughout the state. Their three QI’s are:

  • James Beck
  • James Miller
  • Rick Wittstock

We have found IPX to be extremely responsive to inbound customer requests. If you need someone local in Arizona, they are an excellent choice. Here are their three qualified intermediaries and office locations:

Phoenix – James Beck – 2425 E. Camelback Rd, Suite 200 Phoenix, AZ 85016

Chandler – James Miller – 3100 W Ray Rd Ste 141 Chandler, AZ 85226

Tempe – Rick Wittstock – 60 E. Salado Parkway, Suite 1103 Tempe, AZ 85281

First American Exchange Company (First Am)

first american exchange company a top 1031 exchange company in arizona

Founded originally in the 1980s, First American is one of the best 1031 exchange companies in the entire country. Not surprisingly, they also have a strong presence in the state of Arizona. With one office and two qualified intermediaries with decades of combined experience, we highly recommend First Am for Arizona-based investors.

Also, they’re a subsidiary of First American Financial (FAF), a Fortune 500 company. Their large size and financial backing helps you rest easy knowing your exchange funds are safe. If you are looking to do a 1031 exchange in Arizona, they are a great option.

Services First American Exchange Company Offers

Both of First Am’s Arizona-based qualified intermediaries are highly qualified and have been conducting 1031 exchanges for decades. They can help with nearly any type of 1031 exchange. These include:

  • Delayed 1031 Exchange
  • Reverse 1031 Exchange
  • Improvement 1031 Exchange (Also called construction or build-to-suit exchange)
  • Simultaneous 1031 Exchange

First American Exchange Experience and Financial Stability

First Am’s qualified intermediaries are usually members of the Federation of Exchange Accommodators (FEA). This means that they pay dues to attend online and in-person events that help develop skills and knowledge related to the 1031 exchange in Arizona. The FEA is the leading professional organization for 1031 exchange companies and their qualified intermediary employees.

First American is a subsidiary of publicly-traded First American Financial (NYSE: FAF). This is helpful to know that First Am Exchange is not going out of business anytime soon. Even in the event of a major meltdown such as 2008, FAF has billions in revenue and can help keep their subsidiaries in business.

To help with client fund security, First Am holds client funds in completely separately held accounts, not commingled ones. Also, these accounts have FDIC insurance up to the allowable limit. One of the most impressive aspects of First Am is the amount of fidelity bonding and errors and omissions coverage they carry. They have $20M and $10M respectively of these. This is by far the most we’ve seen any exchange company carry in the United States.

First Am Locations and Customer Service

First Am’s has one location in the state of Arizona, with two qualified intermediaries ready to help out with exchanges. We have found First Am’s QI’s to be extremely responsive to inbound requests, and the Arizona team was no different in this regard. We highly recommend reaching out with a request to both Carmine DiFulvio and Sarah Lindsay.

Phoenix Office – 2425 E. Camelback Road,Suite 300 Phoenix, AZ 85016

exeter 1031 a top exchange qualified intermediary in arizona

Exeter 1031

Exeter 1031 has long been near the top of lists of top 1031 exchange companies. They were originally founded in 2004 by William “Bill” Exeter. He originally had a background involving exchanges since 1986, and has built a strong team and culture at Exeter 1031.

They are extremely responsive, have 24/7 customer service, and demonstrate an extremely thorough understanding of 1031 exchanges. They also have other companies that can help with similar real estate services, such as 1033 exchanges, self-directed IRAs, and cost segregation surveys. We recommend Exeter 1031 for all facets of real estate transactions that they can help with.

Services Exeter 1031 Offers

Exeter 1031 and Bill Exeter’s team is an expert in all types of 1031 exchanges, including the 1031 exchange in Arizona. In addition to serving clients, they also give numerous talks and appear on panels for industry events. They are well known in the industry, and their speaking engagements are known to change how other qualified intermediaries conduct the 1031 exchange. Here is the list of services they currently offer:

  • Delayed 1031 Exchange
  • Reverse 1031 Exchange
  • Improvement 1031 Exchange (Also called construction or build-to-suit exchange)
  • Simultaneous 1031 Exchange
  • Self-Directed IRAs

Exeter 1031 Experience and Financial Stability

Since Exeter has been in business since 2004 and employs nearly 30 people, they are one of the most experienced and stable exchange companies. If you are worried about their fidelity bond coverage or errors and omissions coverage, don’t be. They hold $5M in fidelity bonding, and $5M in E&O, which helps you in case of business emergency or a bankruptcy. Most unique to the 1031 exchange industry, they have an office in Wyoming. Because of this, they have chosen to be regulated and audited by the Wyoming Division of Banking.

They make 100% sure that client funds are not commingled with other clients. To do this, they use qualified trust accounts. In addition, they have extensive procedures about who can withdraw from these accounts, including a “multi-factor” authentication. Last, Exeter 1031 is not owned by a large title company and is independently owned by Bill Exeter and his wife. They are not pressured by a publicly owned company like other QI’s are, and only answer to their clients. They can remain a neutral third party in the exchange and will not push unnecessary products.

Exeter 1031 Locations and Customer Service

Exeter 1031 has one office in Arizona, located centrally in Phoenix and run by David Blair. Exeter 1031 is known for their speedy service and responsive qualified intermediaries. We have found them one of the most client-friendly 1031 exchange companies out there, and we recommend them for investors in Arizona. Their location is:

Phoenix – 2415 East Camelback Road,Suite 700 Phoenix, AZ 85016

Old Republic Exchange Company – OREXCO

Image result for old republic exchange 1031, top 1031 exchange company in arizona

Some 1031 exchange companies in Arizona are aimed at individual investors, while others tend to specialize in commercial real estate and REIT’s. Old Republic Exchange Company is well-versed in handling both types of customer. That said, nationwide and their Arizona team in particular has carved out a niche working on large, complex exchanges. If you are an investor in a property that is valued at $750,000 or up in Arizona, they may be a great fit.

Also, they’re a subsidiary of Old Republic International. They also own Old Republic Title and other real estate services subsidiaries. Especially if you are exchanging an Arizona property for one in another state (or vice versa), their team will be a value add. Sheila Long is their primary sales representative in the state of Arizona and keeps her office in downtown Phoenix.

Services Old Republic Exchange Company (OREXCO) Offers

OXERCO offers the full gamut of 1031 exchange services whether you’re an individual investor or a institutional real estate fund. Also, if you are doing a reverse exchange Old Republic is able to handle these from their Arizona office. In addition, they are one of the only 1031 exchange in Arizona companies who is able to handle the simultaneous exchange. This is the full list of services they offer:

  • Delayed or Deferred Exchange: The most common exchange, gives investors 45 days to identify a replacement property and 180 days to close
  • Reverse Exchange: Instead of selling your old property then buying a new one, you buy a new property before your old property is sold.
  • Improvement Exchange (Also called construction or build-to-suit): Allows you to use part of the value in your old property to improve a new property
  • Simultaneous Exchange: When you find a replacement property the same value as your own. You and the second party trade deeds to the properties

Old Republic Exchange Company Experience and Financial Stability

Old Republic (OREXCO) is one of the most stable and secure exchange companies in Arizona and nationwide. Since they are backed and owned by Old Republic International (NYSE: ORI), this gives investors the confidence that OREXCO is not going anywhere anytime soon.

They recognize themselves that there is no national body that regulates the 1031 exchange industry. In the face of this, they have self-imposed strict regulations and standard operating procedures. OREXCO holds a $120M Fidelity bond, one of the highest we’ve seen of any 1031 exchange in Arizona company. Also, they hold a $50M errors and omissions policy that is much higher than other companies of their size. The only downside is that OREXCO does commingle investor funds with one another. In the event of a bankruptcy, your funds could be thought of as “company funds.” This means your funds could be given to creditors before it is returned to you if there is a bankruptcy.

OREXCO Locations and Customer Service

Although Old Republic (OREXCO) is headquartered in Walnut Creek, CA, their Arizona office is a leader in the southwest. They are somewhat responsive to inbound customer requests and offer free consultations alongside any potential exchange. Their Arizona office is centrally located in Phoenix, and Sheila Long serves investors throughout the state. Here’s the location of the OREXCO Arizona office:

Phoenix – 2375 Camelback Rd, Suite 180 Phoenix, AZ 85016

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