Last updated on July 20th, 2021 at 11:34 am
New York’s 1031 exchange rules and regulations | Best 1031 exchange companies in New York | Do I need to use a 1031 exchange company near me?
With market indicators trending upwards, many New York real estate investors who want to expand their portfolio and shield their profits from capital gains taxes are executing New York 1031 exchanges.
Median home values in New York have risen more than 50% since 2012, according to the Zillow Home Value Index, driven by robust job growth and New York City’s status as a global business hub. The market has a truly international appeal — New York City attracts more foreign real estate investment money (in both the residential and commercial sectors) than any other U.S. city.
| 📈 1031 exchange trends According to a July 2020 report from the National Association of Realtors (NAR):
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New York’s 1031 exchange rules and regulations
The rules for New York 1031 exchanges are similar to 1031 exchange rules in the rest of the U.S., with one notable exception that applies to investors who aren’t residents of New York when they execute their exchange.
If you perform a New York 1031 exchange and you’re not a New York resident, you’ll be subject to a 7.7% state income tax on any gain realized from the sale.
Fortunately, there’s a way to avoid this tax: by applying for a New York state tax exemption. Fill out New York Form IT-2663, indicate that the property is being used in a like-kind exchange, and you should be exempt from this tax.
A note on New York’s Real Estate Transfer Tax
New York has a Real Estate Transfer Tax (RETT) that’s assessed when you receive a property. Some investors have expressed concerns that a New York reverse 1031 exchange might trigger the transfer tax, since in a reverse 1031 exchange the replacement property is purchased first, is held by an exchange accommodation titleholder, and later transferred to the investor.
However, in 2016, New York tax authorities confirmed the RETT isn’t triggered during any phase of a reverse 1031 exchange, and the investor can still receive full tax deferral associated with a 1031 exchange.
| 🏠 1031 exchanges: a refresher course Check out our definitive guides to the basics of a 1031 exchange: |
The 3 best 1031 exchange companies in New York
We’ve surveyed New York’s 1031 exchange companies and picked the three best providers in the state. The chart below summarizes each company’s ranking. Jump to the next section for detailed profiles of each company.
| Legal 1031 | Asset Preservation Inc (API) | Corcapa 1031 | |
|---|---|---|---|
| Year established | 2007 | 1993 | 2011 |
| Member of the Federation of Exchange Accommodators? | ✅ | ✅ | ✅ |
| Local offices | ✅ | ✅ | ✅ |
| Company size | 7 employees | 58 employees | 3 employees |
Legal 1031
Legal 1031 has two offices in New York state and a decade-and-a-half of 1031 exchange experience at the top of the company.
Year established: 2007
Locations: New York City and Melville, and Arizona, Florida, Texas, and Washington, D.C.
Leadership: Todd Pajonas, President (14 years)
Member of the Federation of Exchange Accommodators? Yes
Rating: 5/5 stars on Google (1 review)
Company size: Seven
Staff strengths: Legal and financial services. Legal 1031 has attorneys and CPAs on staff
Costs: n/a
Is the client’s money separated or commingled with others? Separated
Bonded and insured? Yes
Expertise: Legal 1031 is well-versed in delayed, simultaneous, reverse, and improvement 1031 exchanges, and with attorneys and CPAs on staff, they’re well-positioned to handle legal and financial obstacles.
Asset Preservation, Inc.
This high-volume 1031 provider — it conducted over 5,000 exchanges in 2020 alone — features many Certified Exchange Specialists on staff.
Year established: 1990
Locations: New York City and Shirley, and nationwide
Leadership: Javier G. Vande Steeg, President and CEO (20+ years)
Member of the Federation of Exchange Accommodators? Yes
Rating: A+ on Better Business Bureau
Company size: 58
Staff strengths: Many API employees are Certified Exchange Specialists, which means they’ve passed the Federal Exchange Accommodators exam and meet the 1031 trade group’s standards for expertise
Costs: Deferred exchange: $1,000-$2,000, reverse exchange: varies
Is the client’s money separated or commingled with others? Separated
Bonded and insured? Yes
Expertise: API has extensive experience with all types of 1031 exchanges, including delayed, improvement, and reverse 1031 exchanges.
Corcapa 1031 Advisors
This small company, established in 2011, has significant investment experience on staff. They specialize in Delaware Statutory Trust (DST) and Tenants-in-Common exchanges and, in a nod to investor security, employ a full-time “due diligence coordinator” to oversee all transactions.
Year established: 2011
Locations: New York City and nationwide
Leadership: Christina Nielson, President (17 years)
Member of the Federation of Exchange Accommodators? Yes
Rating: A+ on Better Business Bureau
Company size: Three
Staff strengths: Corcapa employees leverage significant Investment experience to focus on growing the investor’s portfolio during the exchange
Costs: n/a
Is the client’s money separated or commingled with others? Separated
Bonded and insured? n/a
Expertise: Corcapa has a special focus on Delaware Statutory Trusts and Tenants-in-Common exchanges. The company also employs a “due diligence coordinator” who acts as additional support on all transactions.
Do I need to use a 1031 exchange company near me?
If you’re performing a 1031 exchange on a property in Manhattan, using a 1031 exchange qualified intermediary (QI) based in Manhattan might seem practical, but you could be served just as well by a QI in Albany, Buffalo, or Syracuse.
In fact, you could even work with a QI based in another state. While New York state does have one or two state-specific 1031 regulations, they’re addressable by someone in another state.
Of course, local QIs offer certain advantages. Let’s look at the pros and cons of working with a 1031 exchange QI near you or a nationally-based QI.
Using a qualified intermediary near you for a New York 1031 exchange
| ✅ Pros | ❌ Cons |
|---|---|
| QI will be familiar with New York tax provisions addressing 1031 exchanges | Investors with properties in multiple states may feel limited by working with a locally based QI |
| Intermediaries based in New York will know the local real estate market, which can get you a faster, more lucrative sale on your relinquished property | Local QIs may not have the breadth of experience, or adequate institutional knowledge, to handle unusual problems |
| A local QI can advise you on reputable local service providers | Smaller companies may charge higher fees |
Using an out-of-state qualified intermediary for a 1031 exchange in New York
| ✅ Pros | ❌ Cons |
|---|---|
| A national provider may do a higher volume of transactions, which can mean lower fees | A national QI may not be familiar with 1031 exchange tax provisions unique to New York |
| Big companies may have more institutional knowledge to apply to any problems that may arise | Unfamiliarity with the local market may translate to a lower sale price for your relinquished property |
| If you want to execute a 1031 exchange on multiple properties in different states, a national QI might make more sense | Won’t have a professional network of proven service providers to recommend |
Contact us today and we’ll get you started on the path to full tax deferral. Our experienced 1031 experts will answer all your questions, address all your concerns, and help you find the right qualified intermediary to get your New York 1031 exchange over the finish line!
