Disrupting the 1031 Exchange Pricing Status Quo
In the world of tax-deferred exchanges, most Qualified Intermediaries (QIs) follow a “quiet” industry standard: they keep the interest earned on your exchange funds for themselves, and in addition charge a hefty fee. At e1031xchange, we have reinvented this model and now offer the most competitive pricing anywhere: we share the interest earned and charge no additional fee for the exchange! Once again, we are on the forefront of disrupting the industry by being the first and only company to offer interest split pricing option.
This guide explains how you can offset your exchange fees—and potentially turn a profit—simply by choosing an intermediary that shares the interest with exchangers.
Are you ready to maximize your exchange proceeds?
Why Interest Sharing is a Game Changer
For decades, the QI industry has relied on a “float” model. When a taxpayer sells a property, the proceeds sit in a bank account held by the QI until the replacement property is purchased. During those 45 to 180 days, that money earns interest.
Prior to our revolutionary pricing model, all QIs kept 100% of that earned interest as an undisclosed “hidden fee.” We changed all that by offering an interest split, we provide a more equitable partnership that prioritizes the investor’s bottom line.
How the e1031xchange Interest Split Works
Our pricing model is straightforward. To qualify for interest sharing, proceeds must be held in exchange for at least 30 days (shorter holding periods simply don’t generate enough interest to make this pricing option worthwhile). This aligns perfectly with the standard 1031 timeline, as most investors utilize the full 45-day identification period or longer before closing on a replacement.
If minimum holding period is met, we also waive our fee of $395, and share the interest with the exchanger. Therefore, you will have $0 in service fees, and actually earn a profit on the exchange.
The amount of interest you receive is tiered based on the size of your transaction:
- Proceeds over $500,000: Receive 1% in interest on the entire proceeds.
- Proceeds over $1,000,000: Receive 1.5% in interest on the entire proceeds.
- Proceeds over $2,500,000: Receive 2.5% in interest on the amount over $2,500,000 and 1.5% on the remaining amount.
Real-World Example: Seeing the Savings
Let’s look at a scenario with an exchange with $1.2 million in proceeds.
Most competitors charge a $1,000 fee and keep all the interest; your cost is $1,000 plus the “lost” opportunity of the interest. At e1031xchange, with $1.2 million held for 60 days, you receive a 1.5% interest credit, and no service will be charged. The difference here is $7,000!
Frequently Asked Questions
Is my money safe while earning interest?
Yes. Every exchange is separately held and accounted for its specific deal, which allows separate FDIC insurance for all exchanges, and we also carry a fidelity bond insurance. With over 25 years of experience, few other QIs have our track record. Your funds are protected and liquid for your next purchase.
Why don’t other QIs do this?
Retaining interest is a massive revenue stream for traditional firms. We’ve chosen to disrupt this model to provide better value for our clients. We differentiate on price while offering superior service.
The Future of the Exchange Industry
We are committed to transparency. By offering an interest split, we aren’t just providing a service; we are setting a new benchmark for how Qualified Intermediaries should operate. As more investors demand better terms, the “keep-it-all” model will become a thing of the past.
Is this legal advice?
No. This article is for informational purposes. Always consult with a tax professional or CPA before initiating a 1031 exchange.
Ready to Experience the e1031xchange Difference?
Your exchange proceeds should work for you, not your intermediary. If you are planning an exchange, let’s talk about how our interest-sharing model can put more capital back into your next investment. Contact our team today to get started.
