1031 Exchange: About Escrow Interest
Why you should care
At MEGA 1031, we know every cent involved in every transaction is your money – not ours to use and profit from during the exchange process. We believe this highly conscientious viewpoint sets us far above most of the Qualified Intermediary industry.
According to the Federation of Exchange Accommodators, about 86% of Qualified Intermediaries (QI) use client escrow monies to earn higher interest rates and increase their profits during transaction periods.
We believe this practice of “co-mingling” or pooling client monies into large company accounts exposes clients to substantially more financial risk. Such accounts are legally considered an asset of the QI and if the QI goes bankrupt or gets sued, clients can lose all their escrow money. In one bankruptcy case, clients who bought Replacement Property in the three months prior to the QIs bankruptcy were actually ordered to give their money back to the QI’s estate to pay the QI’s creditors.
In order to resolve such security and tax issues, the U.S. Treasury Department and Internal Revenue Service are now reviewing this common QI industry practice of “co-mingling” client accounts.
The MEGA 1031 Difference
- By holding escrow monies in safe, segregated accounts, clients always know the complete financial risk associated with how their money is invested.
- Money is available without delay to clients to purchase replacement property.
- To further ensure peace of mind, MEGA 1031 is fully bonded and insured.
How much money can you save with MEGA 1031?
The MEGA 1031 transparent banking approach also means more money paid back to clients at the end of their transactions. The amount varies according to amount invested, interest rate and time length of the investment.
Here are a few examples of how much escrow interest can be earned and returned to clients during exchange transactions:
| Escrow Interest Examples | ||||||
| Escrow Amount | Interest Rate* | Time Period | Interest Accrued | |||
| $200,000.00 | 3.59 | 100 days | $1,967.12 | |||
| $500,000.00 | 4.31 | 100 days | $5,904.11 | |||
| $1,200,000.00 | 4.49 | 100 days | $14,761.64 | |||
*This is for example purposes only. Actual rates vary according to the federal interest rates and the time period of deposit.
In addition to interest savings and increased security, MEGA 1031 clients have access to a team of highly trained professionals dedicated to providing the most personal service at every level. Each staff member goes the extra mile to listen to clients’ concerns, discuss strategies, and provide sound guidance on every step of each transaction.
MEGA 1031
Integrity Security Experience Service
