1031 Exchange in Illinois: Rules, Requirements, and the Best Companies to Use

Last updated on July 6th, 2021 at 10:23 am

Illinois’s 1031 exchange rules and regulations | Best 1031 exchange companies in Illinois | Do I need to use a 1031 exchange company near me?

The Illinois real estate market is on a steady climb, and investors in the Land of Lincoln are turning to Illinois 1031 exchanges to protect their gains from the taxman.

According to the Zillow Home Value Index, the median home value in Illinois has risen nearly 50% since 2012, from $157,000 to just under $230,000 in 2021.

Experts project that  increase to continue, as the Illinois economy maintains its strength. The state employs more than 24 million people, with average annual employment growth of over 2.6%. 

In Chicago and throughout the state, real estate investors are using Illinois 1031 exchanges to defer costly capital gains taxes, and reinvest their hard-earned profits.

📈 1031 exchange trends
According to a July 2020 report from the National Association of Realtors (NAR):
  • An impressive 12% of all sales transactions since 2016 have been part of a 1031 exchange.
  • 1031 exchanges are becoming more popular with small investors. In a 2015 NAR survey, 81% of exchange properties were held by small individual investors; by 2020, that number increased to 84%.
  • 61% of realtors have handled at least one 1031 exchange transaction since 2016.

Illinois’s 1031 exchange rules and regulations 

Illinois doesn’t have any specific statewide laws governing 1031 exchanges, so an Illinois 1031 exchange will generally be a straightforward affair.

But that doesn’t mean it’s any less important to find the right qualified intermediary (QI) to help execute your Illinois 1031 exchange. An experienced QI can mean the difference between a smooth, successful exchange, and a stressful exchange that may not even yield the tax deferral benefits you’re looking for. 

Contact us today and we’ll put you in touch with an experienced 1031 exchange expert who’ll get your Illinois 1031 exchange off to a great start.

1031 exchanges from A to Z
If you’re wondering what a “qualified intermediary” is or you have any other questions about 1031 exchanges, you’ll find the answers you’re looking for in our definitive guides: 

The 4 best 1031 exchange companies in Illinois

We studied 1031 exchange companies in the state of Illinois, and these are the best four we found. The chart provides the basics. The detailed company profiles below go into all the details.

First American Exchange Company (First Am)IPX 1031Chicago Deferred Exchange Company Chicagoland 1031 Exchange
Year established 199019881989n/a
Member of the Federation of Exchange Accommodators?
Local offices
Company size 100+ employees100+ employees 10+ employees4 employees
Cost of deferred 1031 exchange $1,000 $1,000 n/a n/a
Cost of a reverse 1031 exchange $10,000-15,000, plus fees $6,000+ n/a n/a

First American Exchange Company (First Am)

This national 1031 exchange company is a subsidiary of Fortune 500 company First American Financial, so it’s stable and well-capitalized. With attorneys on staff in all offices, and one of the largest fidelity bonds in the industry, First Am offers a solid option for Illinois investors.

Year established: 1990

Locations: Chicago and nationwide

Leadership: Carmine DiFulvio, Senior VP (15 years)

Member of the Federation of Exchange Accommodators? Yes

Rating: A+ on Better Business Bureau

Company size: 100+

Staff strengths: Attorneys on staff in all offices nationwide, with CPAs often available

Costs: Deferred exchange: $1,000, reverse exchange: $10,000-$15,000 plus fees

Is the client’s money separated or commingled with others? Separated

Bonded and insured? Yes. $20 million fidelity bond, $10 million errors and omissions insurance coverage

Expertise: First American manages a variety of 1031 exchanges, including deferred, reverse, improvement, and simultaneous exchanges.

IPX 1031

IPX’s regional office is located in Chicago, making it a convenient choice for most Illinois investors. IPX’s large staff has extensive industry experience, and the company’s fees are reasonable. Illinois investors considering an improvement 1031 exchange or a reverse 1031 exchange should give IPX a long look. 

Year established: 1988

Locations: Chicago and nationwide

Leadership: John Wunderlich, President (10 years)

Member of the Federation of Exchange Accommodators? Yes

Rating: A+ on Better Business Bureau

Company size: 100+

Staff strengths: IPX employees typically have significant commercial real estate and legal experience

Costs: Deferred: $1,000;+ reverse: $6,000+

Is the client’s money separated or commingled with others? Separated

Bonded and insured? Yes. $100 million fidelity bond, and $30 million in errors and omissions coverage

Expertise: IPX maintains a reverse and improvement exchange division that specializes in reverse and improvement 1031 exchanges.

Chicago Deferred Exchange Company 

The Chicago Deferred Exchange Company (CDEC) was established in the early days of the 1031 exchange era, and does most of its business in Illinois and California. Although the company is small, it’s performed over 55,000 1031 exchanges, and has shown an ability to effectively advocate for their clients when it comes to the IRS.

Year established: 1989

Locations: Chicago, San Diego, and San Francisco 

Leadership: Mary Cunningham, President (15+ years)

Member of the Federation of Exchange Accommodators? Yes

Rating: A+ on Better Business Bureau

Company size: 10+

Staff strengths: CDEC has obtained several IRS Private Letter Rulings (PLR), a difficult-to-procure personalized tax ruling that’s solicited by a tax attorney or professional. A PLR clarifies how tax law applies to an individual’s specific circumstances before they file, so they can avoid complications. The company’s core team features an experienced attorney.

Costs: n/a

Is the client’s money separated or commingled with others? Separated

Bonded and insured? n/a

Expertise: CDEC keeps it simple, offering only deferred and reverse exchanges.

Chicagoland 1031 Exchange

Chicagoland 1031 Exchange is a small company with extensive experience at the top. Aside from basic deferred 1031 exchanges, the company also offers Delaware Statutory Trust exchanges, and farm and ranch 1031 exchanges. Chicagoland also offers clients the services of a certified financial planner. 

Year established: n/a

Location: Arlington Heights

Leadership: Nathan Kuhn, President (10+ years)

Member of the Federation of Exchange Accommodators? n/a

Rating: None online

Company size: 4

Staff strengths: A Certified Financial Planner is part of the core team, and Kuhn has personally handled over 200 1031 exchange transactions.

Costs: n/a

Is the client’s money separated or commingled with others? Separated

Is the client’s money separated or commingled with others? n/a

Expertise: Chicagoland 1031 Exchange offers standard exchanges (deferred, reverse, etc.), as well as DSTs, and farm and ranch exchanges.

» READ MORE: 1031 exchange terms and definitions

Do I need to use a 1031 exchange company near me?

If you live in Chicago, it’d be convenient in a lot of ways to use a Chicago-based 1031 exchange qualified intermediary. But it’s not a must.

Qualified intermediaries in Peoria, Moline, or Wheaton could do the job just as well. And because Illinois doesn’t have any state-specific laws governing 1031 exchanges, you could even use a QI from an out-of-state company. 

So how do you decide who to work with? Let’s look at the positives and negatives of using a national QI or a local Illinois QI.

Using a qualified intermediary near you for an Illinois 1031 exchange

✅ Pros❌ Cons
Familiarity with the Illinois real estate market helps you avoid pitfalls, especially when you’re approaching the 180-day deadline.Local QIs may not have the breadth of experience that national QIs have
Can refer you to a local network of service providers Smaller companies generally do lower volume, which sometimes translates to higher fees
Often available for personal meetings

Using an out-of-state qualified intermediary for a 1031 exchange in Illinois

✅ Pros❌ Cons
National companies often do higher volume, which means they sometimes charge lower feesNational QIs may be less familiar with state and municipal real estate regulations
The more extensive experience of a national QI can come in handy if your exchange runs into obstaclesIf they aren’t familiar with the local market your sale could get held up, and you could miss the 180-day deadline
If you’re executing a 1031 exchange on properties in multiple states, a national company can make more senseCan be more challenging for QI to recommend reputable local service providers

Working with the right qualified intermediary will ensure that you meet all the requirements of the 1031 exchange and receive your hard-earned tax benefits. 

Contact us today and we’ll put you in touch with one of our experienced 1031 exchange experts, who’ll make sure you get your exchange off to a great start.

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