The 1031 exchange is a complicated procedure that must be handled professionally. To help you understand this procedure better, below is listed some of the most common frequently asked questions and answers. 1. What is the advantage in using the 1031 exchange? You can save money on your taxes by using the 1031 exchange. Anytime you sell property you must pay the taxes on the money you received from the transaction. By exchanging the property with similar property you can defer the taxes, thus saving you money. 2. How long do I have to complete this transaction? You must identify the property you intend to purchase within forty-days of the closing date of the property sold. You have exactly 180 days to close the deal on the new property that you purchase from the date of the closing. 3. What is a "Qualified Intermediary" and why do I need one? This is the person or company that you hire to handle the 1031 exchange. There are several reasons why you would need to use a "Qualified Intermediary". For example, you will need someone that has experience in this field to ensure that you are following all the legal procedures. Making mistakes could cost you in the long run. Also to qualify for the deferred tax you need the "Qualified Intermediary" to transfer the money between the two properties. You are not allowed to handle the money personally. Neither will your personal accountant or attorney be allowed to make the transaction for you. 4. What is a reverse exchange? This is when you purchase new property before selling your existing property. Your "Qualified Intermediary" will take and hold the deed to this new property until your existing property is sold. 5. Can I use the 1031 exchange more than once? Yes, you can exchange multiply properties. You just have to make sure that each one fits the requirements of the 1031 exchange, and is completed within the time frame required.