1031 Exchange Loan
Wilshire Quinn provides 1031 exchange loans with fast pre-approvals and funding typically within five to seven days. If you’re nearing your 1031 exchange deadline and need fast, reliable capital to complete your transaction, contact a Wilshire Quinn representative today to discuss our flexible 1031 loan options.
- A nationwide direct lender, not a broker
- Pre-approval in 24 hours
- Typical funding times in five to seven days
- Loan amounts up to $20,000,000
- Foreign nationals OK
Purchase | Refinance | Cash-Out | Rehab | 1031 Exchange
Trusted Lender Offering Nationwide 1031 Exchange Financing
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What is a 1031 Exchange?
A 1031 Exchange is an IRS approved process where like-kind business or investment properties are exchanged without immediate tax liability to the property owner. The IRS has set out strict time deadlines for 1031 exchanges – no exceptions:
- You are required to complete the exchange within 180 days.
- You must provide the IRS with 3 property purchase options within 45 days of beginning the exchange process to determine eligibility.
- Once eligibility is determined, you can proceed with purchasing the property, mindful of the 180 day timeline.
Given the strict time deadlines associated with 1031 exchanges, obtaining a bridge loan from a hard money lender can be a way to close quickly on a property to ensure closing before the exchange deadline. Bridge lenders typically close loans in a few weeks as opposed to traditional lending institutions that could take up to a few months. Wilshire Quinn, a trusted 1031 exchange lender, typically funds a 1031 loan in just 5–7 days. Hard money lenders give you the flexibility to close deals fast, allowing you to manage your exchange deadline time with less stress.
Who qualifies for a 1031 Exchange?
According to the IRS, owners of investment and business properties may qualify for a Section 1031 deferral. Individuals, C corporations, S corporations, partnerships (general or limited), limited liability companies, trusts and any other taxpaying entity may set up an exchange of business or investment properties for business or investment properties under Section 1031.
What qualifies the property for a 1031 Exchange?
The property being sold and the replacement property(ies) must meet certain requirements to be eligible for a 1031 exchange.
- Primary residences are not eligible. The properties must be for business purpose or investment properties. A primary residence or vacation home does not qualify for a 1031 loan.
- The properties must be “like-kind” or similar. Most real estate will be considered like-kind to other real estate. Quality is not a consideration. It can even be a building being replaced by vacant land. An exception to this is property outside the United States.
Timeline for a 1031 Exchange
A 1031 Exchange does not have to be done simultaneously, but it does have to meet 2 very strict time limits. The fist limit is 45 days from the start. The clock starts on your timeline the day escrow closes on the sale of your property. You must identify potential replacement properties within these 45 days. The replacement properties must be identified clearly in written correspondence. This includes a legal description, street address or distinguishable name.
The second time limit is the 180 day limit. The replacement property must be received and the exchange completed no later than 180 days after the sale of the exchanged property or the due date (with extensions) of the income tax return for the tax year in which the relinquished property was sold, whichever is earlier. Working with an experienced 1031 exchange lender can help ensure deadlines are met and 1031 exchange financing is secured in time.
Benefits of a 1031 Exchange
Example #1 – Cash Out
Brad is the owner of a 5 unit apartment complex in San Diego, CA. He bought the investment property 20 years ago for $1,000,000, putting $250,000 down and financing $750,000. Now the property is worth $2,000,000. Given that the property has increased in value 2 times its worth 20 years ago, Brad decides he wants to sell the property. He still owes $500,000 on his mortgage and will pay a tax rate of 30%.
Original Purchase 20 years ago
| Original Mortgage | $750,000 |
| Original Cash Down | $250,000 |
| Original Purchase Price | $1,000,000 |
Theoretical Sale Today
| Sales Price | $2,000,000 |
| Mortgage Payoff | ($500,000) |
| Net Proceeds | $1,500,000 |
| Capital Gains | $1,000,000 |
| Approximate All-In Tax Rate | 30% |
| Approximate Tax Bill | ($300,000) |
Example #2 – Brad does a 1031 Exchange
1031 Financing Summary
| Net Proceeds From Sale | $1,500,000 |
| Purchase Price of New Property | ($2,000,000) |
| Required Mortgage Amount | $500,000 |
Brad gets a bridge loan to finance the additional $500,000 to defer 100% of the capital gains tax.
| New Mortgage | $500,000 |
| Defered Taxes | $300,0000 |
Bridge loans are typically funded within 5-7 days. Brad was able to use a bridge loan to purchase the replacement property within the 180 deadline and time to spare. By using a 1031 exchange to reinvest into a new property, he was able to defer taxation of $300,000 on his capital gains. A bridge loan assisted him in completing the transaction on-time without coming out of pocket.
* The information provided here is not meant to be considered as tax advice or legal advice, but for general discussion purposes only. Please do not rely on this information as authoritative. Please consult your attorney or tax professional for specific advice.
1031 Exchange Financing
Many investors use a bridge loan to successfully navigate through a 1031 exchange on-time.
If you are in the process of a 1031 Exchange and are running out of time, call us today to get a pre-approval. We can fund in as little as 5 days to help you close on your replacement property on time with reliable 1031 exchange financing. Borrow up to $20M for commercial & residential real estate.
Here’s What Our Borrowers Are Saying
A Proven 1031 Exchange Bridge Loan Lender, Lending Nationwide
Recently Funded Hard Money Loans
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FAQs – 1031 Exchange (Like-Kind Exchanges) – IRS Guidelines
A 1031 exchange loan is a short-term financing option used to acquire a replacement property while deferring capital gains taxes under IRS Section 1031. It helps bridge the gap between the sale of your current investment property and the purchase of a like-kind property.
Investors often need 1031 exchange financing when they are facing strict IRS deadlines and need to close quickly on a replacement property. Traditional financing may take too long, whereas 1031 exchange loans can fund in as little as 5–7 days.
Yes. As long as the property is being used for business or investment purposes, a 1031 loan can be used for both commercial and residential investment properties, including multifamily units, rentals, and apartment buildings.
Working with a direct 1031 exchange lender means faster approvals, minimal documentation, flexible terms, and quick closings, crucial for meeting 45- and 180-day IRS deadlines in a 1031 exchange.
Loan amounts vary by lender, but most private lenders offer 1031 exchange financing ranging from $500,000 to $20,000,000, depending on property value, equity, and borrower profile.
Yes. Many 1031 exchange lenders work with foreign nationals and international investors, provided the property is located in the United States and used for business or investment.
If you miss either of the IRS deadlines, your exchange becomes disqualified and the entire gain from the sale may be subject to capital gains tax. 1031 exchange financing can help prevent delays and keep your exchange on track.
Cash-out refinances are not eligible within the exchange itself, but bridge loans can be used post-exchange for refinancing purposes, depending on your strategy. Consult with your 1031 exchange lender for custom options.