--- title: How 1031 Exchange Proceeds and QI-Held Funds Are Taxed description: Learn more about how 1031 Exchange proceeds and Qualified Intermediary held funds are taxed. image: https://blog.fgg1031.com/hubfs/images/blog/Understanding%20the%20Difference%20Between%20Inheritance%20and%20Estate%20Tax/Understanding%20the%20Difference%20Between%20Inheritance%20and%20Estate%20Tax.jpeg --- [info@firstguardiangroup.com](mailto:) [(866)398-1031](tel:(866)398-1031) [![fgg](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2022/fgg.png)](https://brokercheck.finra.org/individual/summary/6470002) [![fgg-871923](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2023/fgg-871923.png)](https://www.bbb.org/us/ca/san-jose/profile/commercial-real-estate/first-guardian-group-1216-887513) [![logo](https://blog.fgg1031.com/hs-fs/hubfs/FirstGuardianGroup_2022/logo.png?width=175&height=56&name=logo.png "logo")](http://fgg1031.com) - [Home](https://fgg1031.com/) - [About Us](https://fgg1031.com/about-us/) - [Current Offerings](https://fgg1031.com/property-listings-directory/) - [Resource Center](https://fgg1031.com/resource-center/) - [Glossary](https://fgg1031.com/glossary/) - [Accommodators](https://fgg1031.com/accommodators/) - [FAQ](https://fgg1031.com/faqs/) - [Tax eBook](https://pages.fgg1031.com/resources/real-estate-tax-deferral-strategies-ebook) - [Real Estate eBook](https://pages.fgg1031.com/real-estate-investing-in-the-new-era2) - [QI eBook](https://pages.fgg1031.com/resources/qualifiedintermediary/ebook) - [Tax Calculator](https://fgg1031.com/tax-calculator/) - [Newsroom](https://fgg1031.com/newsroom/) - [Blog](https://blog.fgg1031.com/blog) - [Events](https://fgg1031.com/events/) - [Contact Us](https://fgg1031.com/contact/) ![search-interface-symbol](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2022/search-interface-symbol.png) ![loader](https://f.hubspotusercontent-eu1.net/hubfs/24949188/Business%20and%20Finance/global/22.gif) ![close](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2022/close.png) From Pages From Blog Pages Load More Load More **Sorry, we couldn't find a match for  "".** Check your spelling or try a related search term. [![Register](https://no-cache.hubspot.com/cta/default/5468919/d02a3ee4-7db2-4d64-b925-a6ebbfe26664.png)](https://cta-redirect.hubspot.com/cta/redirect/5468919/d02a3ee4-7db2-4d64-b925-a6ebbfe26664) ![blog-template-banner](https://blog.fgg1031.com/hs-fs/hubfs/Blog%20Banner/blog-template-banner.png?width=1920&name=blog-template-banner.png "blog-template-banner") # Blog ### Subscribe to Our Blog ### Subscribe to Email Updates ## Featured Post   [Paul Getty](https://blog.fgg1031.com/blog/author/paul-getty) ## [721 UPREIT Options in DST Programs (Part 3)](https://blog.fgg1031.com/blog/721-upreit-options-in-dst-programs) We have previously written two blog posts on 721 UPREIT options which discuss basic concepts which I encourage readers to review prior to reading this b\[...\] [Real Estate Investors](https://blog.fgg1031.com/blog/topic/real-estate-investors) [DST](https://blog.fgg1031.com/blog/topic/dst) [721 Exchange](https://blog.fgg1031.com/blog/topic/721-exchange) [UPREIT](https://blog.fgg1031.com/blog/topic/upreit) [Read More](https://blog.fgg1031.com/blog/721-upreit-options-in-dst-programs) ## Recent Posts [1031 Exchange Funds](https://blog.fgg1031.com/blog/topic/1031-exchange-funds) [1031 Exchange](https://blog.fgg1031.com/blog/topic/1031-exchange) [Qualified Intermediary](https://blog.fgg1031.com/blog/topic/qualified-intermediary) # How 1031 Exchange Proceeds and QI-Held Funds Are Taxed By [Paul Getty](https://blog.fgg1031.com/blog/author/paul-getty) In a 1031 exchange, the sale proceeds from your relinquished property are held by a Qualified Intermediary (QI) while you identify and close on a replacement property. Those funds are not taxable while they sit with the QI — but two specific events can create a tax liability: receiving cash back when not all proceeds are reinvested, and earning interest on funds while they are held. Understanding how both are treated before your exchange closes is the most reliable way to avoid unexpected tax bills. A Qualified Intermediary is a neutral third party required by the IRS to facilitate a 1031 exchange. The QI receives your sale proceeds directly from escrow, holds them during the exchange period, and disburses them to acquire your replacement property. Choosing an experienced QI is one of the most consequential decisions in the exchange process — their structure, practices, and documentation directly affect both your compliance and your tax outcome. FGG1031 provides[Qualified Intermediary services](https://fgg1031.com/accommodators/) for investors navigating this process and can walk you through exactly how your funds will be held and reported. #### **How Does a 1031 Exchange Work?** Under Section 1031 of the Internal Revenue Code, investors can defer capital gains taxes when selling an investment or business property, provided the proceeds are reinvested into one or more like-kind replacement properties within specific timelines and in strict compliance with IRS rules. The two key deadlines are 45 days from the sale date to identify potential replacement properties, and 180 days from the sale date — or the tax return due date, whichever is earlier — to close on the replacement property. As long as all proceeds are reinvested and all other requirements are satisfied, capital gains and depreciation recapture taxes are fully deferred. The exchange does not eliminate those taxes — it postpones them until the replacement property is eventually sold outside of a 1031 structure. What makes the process work is the role of the QI, whose job is to ensure the investor never has direct access to the funds between the sale and the purchase. **Key Point: A 1031 exchange defers capital gains taxes as long as all proceeds are reinvested through a QI into qualifying like-kind property within IRS deadlines.** #### **How Are Uninvested Funds Returned by the QI Taxed?** When you sell your relinquished property, you may not end up reinvesting every dollar of the exchange proceeds. There are three common scenarios where funds are returned to you by the QI: | **Scenario** | **What Happens** | | --- | --- | | Deliberate partial reinvestment | You reinvest a portion of proceeds and receive the remainder back | | Partial exchange completion | You close on some identified properties but not all within the 180-day window | | Failed exchange | You are unable to identify or close on any replacement property within IRS deadlines | In all three scenarios, any cash returned to you by the QI is treated as taxable boot. Boot is the term used for cash or non-like-kind property received in a 1031 exchange, and it is taxable in the year of the sale up to the amount of gain realized. The taxable portion may include federal and state capital gains, depreciation recapture, and the net investment income tax, depending on your cost basis and prior depreciation history. A common misconception is that returned funds are somehow protected because an exchange was attempted. They are not. You recognize gain to the extent of the lesser of the boot received or your total realized gain on the sale. This is why working with your advisor team before closing — not after — to model how much of your proceeds can realistically be reinvested is so important to maximizing deferral. **Key Point: Any cash returned to you by the QI is taxable boot in the year of sale, regardless of whether a 1031 exchange was attempted.** #### Is Interest Earned on QI-Held Funds Taxable? While your proceeds are held by the Qualified Intermediary, they are often placed in an interest-bearing account such as a money market fund or bank deposit. Even though you cannot access the principal during the exchange period, the IRS treats any interest earned on those funds as taxable income to you in the year it is earned. In practice, the QI tracks interest earned on your exchange account and either issues a Form 1099-INT directly or coordinates with the financial institution holding the funds to do so. You report the interest as ordinary income on your tax return for that year. Importantly, the principal exchange proceeds remain fully eligible for 1031 deferral — only the interest is treated as taxable investment income. Earning interest on exchange funds does not disqualify the exchange, provided you never had constructive receipt of the principal before the exchange was completed. Some QIs offer interest-free account structures, often in exchange for lower fees or simpler administrative arrangements. In those cases no taxable interest is generated, but the investor also earns no return on the idle cash during the exchange period. When evaluating a QI, it is worth asking directly how exchange funds will be held, whether interest will be earned, and who will issue the Form 1099-INT and when. FGG1031's[QI accommodator service](https://fgg1031.com/accommodators/) addresses these questions upfront so there are no reporting surprises at year end. **Key Point: Interest earned on QI-held funds is taxable as ordinary income in the year earned and reported on a Form 1099-INT — it does not affect the deferral of the principal exchange proceeds.** #### **What Are the Best Planning Steps to Reduce Tax Surprises?** Proactive planning before the exchange closes is the most effective way to manage the tax impact of returned funds and QI-held interest. The following steps apply to most exchange scenarios: *Model the exchange before selling — work with your CPA to estimate realized gain, potential boot, and the reinvestment amount needed to achieve full deferral* *Be realistic about your replacement property strategy — if partial reinvestment is likely, plan for the taxable boot and consider whether capital losses or other offsets are available* *Ask your QI how funds will be held — confirm whether interest will accrue, at what rate, and who will issue the Form 1099-INT* *Coordinate timing with your tax year — boot is recognized in the year of sale and interest is taxable in the year earned, so timing relative to tax bracket thresholds can matter* *Keep thorough records — exchange agreements, QI statements, closing documents, and Forms 1099-INT are all needed for accurate tax reporting* Tax treatment of 1031 exchange proceeds, boot, and interest income can vary based on your specific circumstances, other holdings, and applicable tax law at the time of your transaction. Always work with a qualified tax advisor, attorney, and financial professional before making decisions related to a 1031 exchange or other tax-sensitive transactions. **Key Point: Modeling the exchange before the sale closes — not after — is the most reliable way to anticipate boot exposure and manage the tax impact of QI-held interest.** #### **Key Takeaways** QI-held exchange funds are not taxable while held, but returned cash and earned interest both create tax obligations Any cash returned by the QI is treated as taxable boot in the year of the sale Interest earned on QI-held funds is ordinary income, reported on a Form 1099-INT Earning interest on exchange funds does not disqualify the 1031 exchange Proactive planning with a tax advisor before the sale closes is the most effective way to reduce surprises #### FAQS **Q1: What is a Qualified Intermediary and why is one required in a 1031 exchange?** A1: A Qualified Intermediary is a neutral third party who receives sale proceeds directly from escrow, holds them during the exchange period, and disburses them to acquire the replacement property. The IRS requires a QI to ensure the investor never has direct access to the funds, which would constitute constructive receipt and disqualify the exchange. FGG1031 provides QI accommodator services for investors completing a 1031 exchange — details are available at[fgg1031.com/accommodators](https://fgg1031.com/accommodators/). **Q2: What is boot in a 1031 exchange?** A2: Boot is any cash or non-like-kind property received by the investor during a 1031 exchange. It is taxable in the year of the sale, up to the amount of gain realized on the relinquished property. Common sources of boot include proceeds not reinvested into replacement property and debt relief when the replacement property carries less debt than the relinquished property. **Q3: Does earning interest on QI-held funds disqualify a 1031 exchange?** A3: No. Interest earned on exchange funds held by the QI does not disqualify the exchange, provided the investor never had constructive receipt of the principal. The interest is simply treated as ordinary investment income, taxable in the year earned and reported on a Form 1099-INT. The principal proceeds remain fully eligible for deferral if all other exchange requirements are met. **Q4: What happens to my exchange funds if the exchange fails entirely?** A4: If the investor is unable to identify or close on a qualifying replacement property within the IRS deadlines, the QI returns all exchange proceeds once the exchange period ends. Those funds are treated as taxable boot in the year of the original sale, meaning the capital gains taxes that the exchange was intended to defer become due at that point. **Q5: When should I involve a tax advisor in my 1031 exchange planning?** A5: Before the sale closes, not after. The most consequential tax decisions in a 1031 exchange — how much to reinvest, how to handle potential boot, and how to structure the replacement property — all need to be made in advance. Engaging a tax advisor and a knowledgeable QI early in the process gives you time to model outcomes and adjust your strategy before the exchange clock starts. We welcome your questions. Contact us today to discuss by emailing us at [info@firstguardiangroup.com](mailto:info@firstguardiangroup.com) or [schedule a no-obligation consultation today!](https://meetings.hubspot.com/pgetty) [![](https://no-cache.hubspot.com/cta/default/5468919/interactive-183027517748.png)](https://blog.fgg1031.com/hs/cta/wi/redirect?encryptedPayload=AVxigLIl27Gme%2BvYYhtxg%2FhBR%2FRvq600uX9MaBq4W79S5fHbs51Aj8viHQ72xBPIJ1l6Gk6mu2IVPuwMBA1tRQ%2Fd52JbH88czuNyHfpSaRzgMgh3MeItQLlzNSbmJFKfkC6HIUTjrovdNf5%2Fb543u%2Bx3YumrwUU0Zw4pjfmpIBf0dWf4%2BGepxKFfyT23U1Iq8Pr3VkuWH%2Bh2mUWsQOLpJhVXbxARk8pDBxupCg0Xp3q%2Bfefy&webInteractiveContentId=183027517748&portalId=5468919) ### [Paul Getty](https://blog.fgg1031.com/blog/author/paul-getty) Paul M. Getty is one of the most experienced 1031 exchange specialists in the United States, with a career in real estate that spans over 35 years and more than $5 billion in commercial transactions across every major asset class. His work covers single-family rentals, apartments, retail, office, multifamily, and student and senior housing, giving him a practical understanding of how different property types perform across market cycles and how investors can move between them using tax-deferred exchange strategies. As President and CEO of FGG1031 | First Guardian Group, Paul advises investors through the full 1031 exchange process, from identifying qualifying replacement properties to structuring acquisitions through Delaware Statutory Trusts (DSTs) and wholly owned real estate. His guidance covers both the compliance requirements of a valid exchange and the investment decisions that determine long-term portfolio outcomes – a combination that is difficult to find in a single advisor. Paul holds a California and Texas real estate broker license and carries Series 22, 62, 63, and 82 securities licenses as a registered representative with Emerson Equity LLC, member FINRA /SIPC. He has represented buyers and sellers across complex commercial transactions, sourced and structured debt and equity, and worked alongside nationally recognized firms including Marcus Millichap, CBRE, JP Morgan, and Morgan Stanley. Before founding FGG1031, he co-founded Venture Navigation, a boutique investment banking firm whose M&A and IPO activity generated over $700 million in investor returns. Paul holds an MBA in Finance from the University of Michigan and a bachelor’s degree in chemistry from Wayne State University. He has also completed coursework in artificial intelligence at Stanford University. He is the author of four books on real estate investing and tax deferral strategy, including Tax Deferral Strategies Utilizing the Delaware Statutory Trust (DST) and Real Estate Investing in the New Era, both available on Amazon. A frequent speaker on 1031 exchanges, DST investing, and real estate tax strategy, Paul Getty is a recognized voice for investors and advisors seeking guidance on capital preservation through tax-deferred real estate investment. ## Your Comments : This is a search field with an auto-suggest feature attached. - There are no suggestions because the search field is empty. - Latest Posts - Popular Posts [Partial 1031 Exchange: How It Works, What Gets Taxed, and When It May Make Sense](https://blog.fgg1031.com/blog/partial-1031-exchange-how-it-works) [ 1031 Exchange](https://blog.fgg1031.com/blog/topic/1031-exchange) [721 UPREIT Options in DST Programs (Part 3)](https://blog.fgg1031.com/blog/721-upreit-options-in-dst-programs) [ Real Estate Investors](https://blog.fgg1031.com/blog/topic/real-estate-investors) [ DST](https://blog.fgg1031.com/blog/topic/dst) [ 721 Exchange](https://blog.fgg1031.com/blog/topic/721-exchange) [ UPREIT](https://blog.fgg1031.com/blog/topic/upreit) [ New featured](https://blog.fgg1031.com/blog/topic/new-featured) [Can a 9% Taxable Return Beat a 4.5% Tax Advantaged DST?](https://blog.fgg1031.com/blog/can-a-9-taxable-return-beat-a-4.5-tax-advantaged-dst) [ Real Estate Investors](https://blog.fgg1031.com/blog/topic/real-estate-investors) [ DST](https://blog.fgg1031.com/blog/topic/dst) [ New featured](https://blog.fgg1031.com/blog/topic/new-featured) ### Categories - [1031 Exchange (143)](https://blog.fgg1031.com/blog/tag/1031-exchange) - [DST (59)](https://blog.fgg1031.com/blog/tag/dst) - [Real Estate Investors (43)](https://blog.fgg1031.com/blog/tag/real-estate-investors) - [Blog (41)](https://blog.fgg1031.com/blog/tag/blog) - [New featured (36)](https://blog.fgg1031.com/blog/tag/new-featured) - [Taxes (18)](https://blog.fgg1031.com/blog/tag/taxes) - [Estate Planning (10)](https://blog.fgg1031.com/blog/tag/estate-planning) - [Investor (8)](https://blog.fgg1031.com/blog/tag/investor) - [REIT (7)](https://blog.fgg1031.com/blog/tag/reit) - [Capital Gains (6)](https://blog.fgg1031.com/blog/tag/capital-gains) - [Qualified Intermediary (6)](https://blog.fgg1031.com/blog/tag/qualified-intermediary) - [721 Exchange (4)](https://blog.fgg1031.com/blog/tag/721-exchange) - [Featured (4)](https://blog.fgg1031.com/blog/tag/featured) - [Opportunity Zones (4)](https://blog.fgg1031.com/blog/tag/opportunity-zones) - [1031 Exchange Funds (3)](https://blog.fgg1031.com/blog/tag/1031-exchange-funds) - [Inflation (3)](https://blog.fgg1031.com/blog/tag/inflation) - [Retirement Planning (3)](https://blog.fgg1031.com/blog/tag/retirement-planning) - [Reverse 1031 Exchange (3)](https://blog.fgg1031.com/blog/tag/reverse-1031-exchange) - [TIC (3)](https://blog.fgg1031.com/blog/tag/tic) - [Apartment Market (2)](https://blog.fgg1031.com/blog/tag/apartment-market) - [Boot (2)](https://blog.fgg1031.com/blog/tag/boot) - [CA Landlords (2)](https://blog.fgg1031.com/blog/tag/ca-landlords) - [Covid-19 (2)](https://blog.fgg1031.com/blog/tag/covid-19) - [Depreciation (2)](https://blog.fgg1031.com/blog/tag/depreciation) - [Depreciation Recapture (2)](https://blog.fgg1031.com/blog/tag/depreciation-recapture) - [IRS (2)](https://blog.fgg1031.com/blog/tag/irs) - [NNN (2)](https://blog.fgg1031.com/blog/tag/nnn) - [UPREIT (2)](https://blog.fgg1031.com/blog/tag/upreit) - [1033 Exchange (1)](https://blog.fgg1031.com/blog/tag/1033-exchange) - [1099A (1)](https://blog.fgg1031.com/blog/tag/1099a) - [AB1771 (1)](https://blog.fgg1031.com/blog/tag/ab1771) - [CPA (1)](https://blog.fgg1031.com/blog/tag/cpa) - [Cost Segregation (1)](https://blog.fgg1031.com/blog/tag/cost-segregation) - [Mortgage (1)](https://blog.fgg1031.com/blog/tag/mortgage) - [PPM (1)](https://blog.fgg1031.com/blog/tag/ppm) - [Rent Relief (1)](https://blog.fgg1031.com/blog/tag/rent-relief) - [Retail (1)](https://blog.fgg1031.com/blog/tag/retail) - [The Tax Cuts and Jobs Act (1)](https://blog.fgg1031.com/blog/tag/the-tax-cuts-and-jobs-act) see all ### Read more of what you like. ## [How to Use 1031 Exchange Funds to Improve Your Replacement Property](https://blog.fgg1031.com/blog/how-to-use-1031-exchange-finds-to-improve-your-replacement-property) [![FGG_Footer_White](https://blog.fgg1031.com/hs-fs/hubfs/FirstGuardianGroup_2022/FGG_Footer_White.png?width=300&height=95&name=FGG_Footer_White.png "FGG_Footer_White")](http://fgg1031.com) 97 East Brokaw Road, Suite 350, San Jose, CA 95112 [(866) 398 1031](tel:(866)%20398%201031) [info@firstguardiangroup.com](mailto:info@firstguardiangroup.com) ## Recent Blogs - [Investing in Senior Housing October 20, 2022](https://blog.fgg1031.com/blog/investing-in-senior-housing) - [A Closer Look at the 7 Deadly Sins October 20, 2022](https://blog.fgg1031.com/blog/a-closer-look-at-the-seven-deadly-sins) - [What is a Springing LLC? October 20, 2022](https://blog.fgg1031.com/blog/what-is-a-springing-llc) ## Useful Links - Home - About Us - Blogs - Testimonials from Past Customers - Resource Center - Current Offerings Disclaimer: There is no guarantee that any strategy will be successful or achieve investment objectives. All real estate investments have the potential to lose value during the life of the investments. This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please be aware that this material cannot and does not replace the Memorandum and is qualified in its entirety by the Memorandum. This material is not intended as tax or legal advice so please do speak with your attorney and CPA prior to considering an investment. This material contains information that has been obtained from sources believed to be reliable. However, FGG1031, First Guardian Group, LightPath Capital, Inc., and their representatives do not guarantee the accuracy and validity of the information herein. Investors should perform their own investigations before considering any investment. There are material risks associated with investing in real estate, Delaware Statutory Trust (DST) and 1031 Exchange properties. These include, but are not limited to, tenant vacancies, declining market values, potential loss of entire investment principal. Past performance is not a guarantee of future results: potential cash flow, potential returns, and potential appreciation are not guaranteed in any way and adverse tax consequences can take effect.  The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities. All financed real estate investments have a potential for foreclosure. Delaware Statutory Trust (DST) investments are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments. Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions. Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits. IRC Section 1031, IRC Section 1033, and IRC Section 721 are complex tax codes; therefore, you should consult your tax and legal professional for details regarding your situation. DST 1031 properties are only available to accredited investors (generally described as having a net worth of over one million dollars exclusive of primary residence) and accredited entities only (generally described as an entity owned entirely by accredited individuals and/or an entity with gross assets of greater than five million dollars). If you are unsure if you are an accredited investor and/or an accredited entity, please verify with your CPA and Attorney prior to considering an investment. Securities offered through registered representatives of [LightPath Capital, Inc.](http://www.lightpathcapital.com/) Member [FINRA](http://www.finra.org/) / [SIPC](https://www.sipc.org/). FGG1031, First Guardian Group, and LightPath Capital, Inc. are separate entities. Copyright 2022, All Rights Reserved, FGG1031 [![FGG_Footer_White](https://blog.fgg1031.com/hs-fs/hubfs/FirstGuardianGroup_2022/FGG_Footer_White.png?width=300&height=95&name=FGG_Footer_White.png "FGG_Footer_White")](http://fgg1031.com) 97 East Brokaw Road, Suite 350, San Jose, CA 95112 [(866) 398 1031](tel:(866)%20398%201031) [info@firstguardiangroup.com](mailto:) [![Bitmap](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2023/Bitmap.png)](https://brokercheck.finra.org/individual/summary/6470002) ## Recent Blogs - [Understanding the Difference Between Inheritance and Estate Tax August 3, 2023](https://blog.fgg1031.com/blog/understanding-the-difference-between-inheritance-and-estate-tax) - [Public or Private Real Estate? Your Investment Portfolio May Need Both July 27, 2023](https://blog.fgg1031.com/blog/public-or-private-real-estate-your-investment-portfolio-may-need-both) - [How to Use 1031 Exchange Funds to Improve Your Replacement Property July 20, 2023](https://blog.fgg1031.com/blog/how-to-use-1031-exchange-finds-to-improve-your-replacement-property) ## Useful Links - [Home](http://fgg1031.com/) - [About Us](https://fgg1031.com/about-us/) - [Blogs](https://blog.fgg1031.com/blog) - Testimonials from Past Customers - [Resource Center](https://fgg1031.com/resource-center/) - [Current Offerings](https://fgg1031.com/property-listings-directory/) FGG1031 | First Guardian Group and Emerson Equity LLC do not provide legal or tax advice. Securities offered through [Emerson Equity LLC](http://www.emersonequity.com/) Member [FINRA/SIPC](http://finra.org/) and MSRB registered. Emerson Equity LLC is unaffiliated with any entity herein. 1031 Risk Disclosure: - There is no guarantee that any strategy will be successful or achieve investment objectives; - Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments; - Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities; - Potential for foreclosure – All financed real estate investments have potential for foreclosure; ·Illiquidity – Because 1031 exchanges are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments; - Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions; - Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits No offer to buy or sell securities is being made. Such offers may only be made to qualified accredited investors via private placement memorandum. Risks detailed in a private placement memorandum should be carefully reviewed, understood and considered before making such an investment. Prospective strategies and products used in any tax advantaged investment planning should be reviewed independently with your tax and legal advisors. Changes to the tax code and other regulatory revisions could have a negative impact upon strategies developed and recommendations made. Past performance and/or forward looking statements are never an assurance of future results. Many of the investments offered will be only available to those investors meeting the definition of an Accredited Investor under SEC Rule 501(A) and offered as Regulation D private placement securities via a Private Placement Memorandum (“PPM”). Prospective investors must receive, read and understand all of the risks associated with buying private placement securities. Investments are not guaranteed or [FDIC](http://fdic.org/) insured and risks may include but are not limited to illiquidity, no guarantee of income or guarantee that all tax advantages or objectives will be met and complete loss of principal investment could occur. **Risk Disclosure:** Alternative investment products, including real estate investments, notes & debentures, hedge funds and private equity, involve a high degree of risk, often engage in leveraging and other speculative investment practices that may increase the risk of investment loss, can be highly illiquid, are not required to provide periodic pricing or valuation information to investors, may involve complex tax structures and delays in distributing important tax information, are not subject to the same regulatory requirements as mutual funds, often charge high fees which may offset any trading profits, and in many cases the underlying investments are not transparent and are known only to the investment manager. Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop. There may be restrictions on transferring interests in any alternative investment. Alternative investment products often execute a substantial portion of their trades on non-U.S. exchanges. Investing in foreign markets may entail risks that differ from those associated with investments in U.S. markets. Additionally, alternative investments often entail commodity trading, which involves substantial risk of loss. NO OFFER OR SOLICITATION: The contents of this website: (i) do not constitute an offer of securities or a solicitation of an offer to buy of securities, and (ii) may not be relied upon in making an investment decision related to any investment offering by FGG1031 | First Guardian Group, Emerson Equity LLC, or any affiliate, or partner thereof. FGG1031 | First Guardian Group does not warrant the accuracy or completeness of the information contained herein. Copyright 2026, All Rights Reserved, FGG1031