What difference would the earned interest make at today's rates? My QI is the cheapest around.
Of course, I'm talking about the interest that accrues on a client's money that is being held by the QI before the exchange is completed. And, I've heard this comment a number of times. But there are few free lunches in life. Sure, corners can be cut by using preprinted forms and so on, but there's got to be a profit in there somewhere. And, usually it's in the interest that the QI keeps. Here's an example:
| Proceeds from the sale of the "old" property: | $250,000 |
| Annual interest rate: | $2% |
| Interest earned in a year: | $5,000 (0.02 x $250,000) |
| Interest earned per month: | $417 ($5,000 ÷ 12) |
| Interest earned should exchange go 180 day max: | $2,500 ($5,000 ÷ 360 days x 180) |
As you can see, even a small interest rate can add up over time. So, for exchanges that aren't going to be short turn-arounds, make your client happy by showing them they can effectively do their exchange for free or even make a few bucks.
--The Experts
Join the Conversation
Have questions about 1031 exchanges? Share your thoughts below.
Comments are closed for this article.