1031 Exchange Specialists,

A National Qualified Intermediary


[1031 ESI]

Corporate Headquarters:
1155 Asbury Avenue
Ocean City
New Jersey 08226

Ocean City, NJ: 609-398-1031

Naples, FL: 877-513-1031

   Fax: 609-398-0500

Web: www.1031esi.com
Email: info@1031esi.com
Independently Owned and Operated
Your Tax Savings is Our Business!

1031 Exchange Specialists, Inc.

So much more than a Qualified Intermediary.

When you're structuring your next 1031 exchange,
there's no room for guesswork.

Peerless strategy, masterful interpretations, and
insightful analysis are just a few of the advantages
we bring to your exchange.  As your Qualified
Intermediary, you'll find us indispensable.

Whether exchanging a rental cottage at the shore,
a commercial warehouse, or an airplane, we stand
ready to help you save tax dollars.

Your tax savings is our business!!!

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A person selling a mobile home and the underlying ground or furniture in a vacation home...Is the transaction real property, personal property, or both for 1031 EXCHANGE purposes? The answer depends on the structure of the transaction and the values assigned to the individual pieces. Call us for the most favorable tax treatment.

A LLC owned solely by H/W is generally taxed as a partnership except in community property states or under a qualified joint venture whereby the LLC is disregarded for tax purposes and the tax filings are at the individual level.

Single Member Disregarded Entity LLCs in a 1031 (link to post)

I had 2 calls recently from individuals who sought IRS approval of their 1031 transaction before it began, only to receive a response from the IRS: "We cannot provide an opinion on your transaction. You should seek the advice of a Qualified Intermediary." Having an experienced QI, such as us, in your transaction is critical to its success.

Sales of new homes surge to biggest total since 2008 (link to article)

My response to a client question about holding periods in a 1031 exchange:

There is no minimum holding period in a 1031 exchange except for related party transactions. In 2008, the IRS issued Rev Proc 2008-16 relating to vacation homes. This Rev Proc was the only time the IRS quantified a holding period with minimum renting and maximum personal usage periods. The holding period in the Rev Proc was 24 months before and after the exchange. The IRS grants “free passes” when meeting the Rev Proc and reserves the right to review the facts and circumstances of the transaction if the taxpayer falls short of the Rev Proc. Falling short of the Rev Proc does not result in an automatic failure.

Intent and actual usage weigh heavily in 1031’s, especially when falling short of the safe harbors. The main concern of the IRS is to weed out “flippers” and “dealers” where ordinary income tax is at risk.

Homeowner Equity has more than doubled since 2009 (Link to article)


As a Qualified Intermediary of 1031 exchanges and the recipient of, in some cases, individual’s life savings, I am occasionally asked “How safe are my funds?”.  Generally, the question is not asked as the majority of our business is from referrals from trusted professionals, such as attorneys, accountants and title agencies.  With the growing use of Google to find service providers, more and more of our business is coming from random internet searches.  In anticipation of this growing market, we include numerous testimonials from trusted professionals on our website with their respective contact information and encouragement to contact these individuals for further information about us as Qualified Intermediaries.

Spending the first half of my career as a practicing CPA and auditor with companies such as Price Waterhouse and Hertz, the invaluable training in the area of safeguarding assets has remained with me throughout my life.  The establishment of adequate internal controls and safeguards has been applied to every business and transaction I am involved in.

Having said that, what controls do we incorporate to prevent the loss of client funds?  We strongly focus on the controls to “prevent” loss, as once the horse is out of the barn, so to speak, then lawsuits, police and insurances are the only remedy.

First, we only utilize a bank that is financially strong.  The fear of bank failures was foremost in the public mind for many years.  For that reason, we have chosen TD Bank for all of our client escrow accounts.  This selection was not because of account earnings but on the soundness and strength of TD and the availability of a secure escrow system managed by TD’s E-Treasury Department outside of the local branch.

TD Bank offers a principally-preserved escrow system whereby, client funds are established in separate accounts “for the benefit of” the client and maintained by client federal identification.  The client receives 1099-Interest statements directly from TD Bank and each account is FDIC insured.  Many Qualified Intermediary companies comingle all client funds into one account to maximize interest earnings.  Doing so limits the FDIC insurance availability.  Other Qualified Intermediaries do not utilize principally-preserved accounts, once again, to maximize interest.  By doing so, FDIC insurance is generally forfeited and the client risks losing all or a part of their principal.  This later scenario occurred in the Land America case several years ago, whereby, client 1031 funds were invested in non-principally preserved accounts to maximize interest earnings.  The result of doing so lost over 400 million dollars of client funds.  The client 1031 exchanges failed and resulted in significant tax liabilities, Land America filed for bankruptcy protection, and the clients had to stand in line with other creditors to attempt to retrieve a portion of their lost funds.  To protect the client funds from bankruptcy and other creditors, our Exchange Agreement clearly states: “1031 ESI is only holding exchange funds to accommodate the exchange, and does not have unfettered control or ownership of the funds. 1031 ESI shall not withdraw, invest, encumber, or pledge the exchange funds without the taxpayer's express written consent. All exchange funds are being set aside for the taxpayer's exchange and shall not be deemed a part of 1031 ESI's general assets or subject to claims of creditors.”

The TD Bank escrow system requires the authorization and approval of all activity by two authorized users.  Each user has a separate user identification and password.  The passwords are required to be changed every 30 days.  Once in the escrow system, the approval and movement of funds requires a separate code that is displayed on an electronic fob held at all times by each authorized user.  The fob code changes every 30 seconds.  Once again, funds cannot be transferred without the input of electronic fob codes by two authorized users.  In our company, the two owners, myself and William Steffens, are the only individuals who have access to the escrow system, are the only authorized users, and each carry the electronic fob with them at all times.


Many Qualified Intermediaries taut having multi-millions of dollars in Fidelity Bond insurance to protect client 1031 funds.  What they are not disclosing is that, by definition, “A fidelity bond is a form of insurance protection that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals. It usually insures a business for losses caused by the dishonest acts of its employees.”  A fidelity bond does not insure losses caused by fraudulent acts by the owners of a business, nor does it protect against mismanaged or poor investments into non-principally preserved accounts or bankruptcy.  Access to or control of client funds by employees is not permitted in our company and the controls we have implemented would prevent that from occurring.  We do not have a parent company putting undo pressure on its employees to meet stockholder demands by taking investment risks with client funds.  We are two business owners who enjoy helping people save taxes and collect a modest fee for doing so.  We kept our doors open through the toughest of markets and through federal disasters, such as Super Storm Sandy, sometimes without drawing a salary, because our first commitment is to our clients and secondly, because we love what we do.

This year, 2016, marks 19 years as being a Qualified Intermediary, following 19 years as an accountant, auditor and practicing CPA.  During my time as a Qualified Intermediary, I have facilitated over 7,200 exchanges totaling more than 3.5 billion dollars of property.  I can proudly state that not a dollar of client funds has been misplaced, misdirected or lost while under my watch, nor have any of my client’s exchanges been audited, reviewed or reversed.  Our reputation for honesty, integrity, experience and knowledge is why our phone continues to ring.  We maintain offices in Florida and New Jersey, facilitating 1031 exchanges in all 50 states.  We appreciate your business and work every day to earn your trust.


George M. Christofely
Founder & President