1031 Exchange Bank Account vs Your LLC Account: Where Sale Money Goes
On this page
When a deal sells and the owners want a like-kind exchange, the first practical question is where the sale money lands. If it lands in the wrong account, the exchange can be at risk. This post covers what the IRS says about intermediaries and deadlines and how that connects to your bank accounts. It is general information; the plan belongs with your CPA and attorney. Facts come from IRS pages, read November 3, 2026.
The IRS rules in brief
The IRS instructions for Form 8824 say a deferred exchange made through a qualified intermediary is treated as a like-kind exchange. They say related parties and agents of the taxpayer aren't eligible to be intermediaries and are called disqualified persons. If the intermediary causes you to miss the timing rules, the transaction may not qualify as a deferred exchange. Two clocks apply:
- 45 days. Replacement property must be identified in writing within 45 days after you transfer the property you gave up. The identification must describe the property clearly, such as by street address or legal description.
- 180 days. The replacement property must be received by the earlier of the 180th day after the transfer or the due date of your return for that year, including extensions.
The IRS tax tips page adds that Section 1031 now applies only to real property, and that real property held primarily for sale does not qualify. Exchanges are reported on Form 8824.
Where the money goes
In a deferred exchange the sale proceeds are held by the intermediary until they buy the replacement property. That is why the sponsor does not want the sale money landing in the deal LLC's own operating account first. Ask your CPA and the intermediary for the exact wiring plan, and give the closing agent those instructions in writing before closing day. The account you open with Mercury or Ramp for operations is a different account for a different job.
Two accounts, two jobs
| Account | Job |
|---|---|
| Deal LLC operating account (Mercury or Ramp) | Rent in, expenses and loan payment out, quarterly distributions |
| Intermediary's exchange account | Holds sale proceeds until replacement property closes |
Syndication specifics
A syndicated deal is usually owned by an LLC taxed as a partnership. An exchange can happen at the entity level when the LLC sells and buys replacement property, but individual investors generally cannot choose their own exchange inside a partnership interest sale. Read 1031 exchange from syndication sale proceeds and DST vs syndication for a 1031. Your operating agreement decides whether the sponsor can do an entity-level exchange.
Questions for your team
- Who is the qualified intermediary, and are they related to or an agent of anyone in the deal?
- What are the dates for the 45 and 180 day periods, and who is tracking them?
- Does the closing agent have the intermediary's wire instructions in writing?
- What happens to reserves and the final distribution in the operating account?
Then read selling a syndicated apartment: the wind-down checklist.
Accounts for the deal itself
DoorRaise suggests Ramp when a deal keeps $25,000 or more and Mercury under that; the sponsor chooses. Open a Mercury account or apply for Ramp. DoorRaise may earn a referral reward if you sign up through these links: for Mercury, the deal company gets $250 and DoorRaise gets $250 once the account receives $10,000 within 90 days, and Ramp may pay a referral reward. A new deal LLC cannot open Ramp before closing (Ramp needs at least $25,000 in cash), so it opens Mercury first to receive the closing funds and can move to Ramp after closing.
How DoorRaise fits in
DoorRaise helps sponsors raise equity for apartment buildings from their friends and followers under Rule 506(b) or 506(c), and verifies that every investor is accredited. Investors' purchase money goes into escrow at Enterprise Bank & Trust by wire only, and wire instructions appear once escrow is open. The deal's operating account at Mercury or Ramp is a separate account that you open for the LLC and use after closing. Fees: $1,500 to set up (non-refundable), then $5,000 a year from closing (only if the deal closes). See pricing or how it works.
FAQ
Can the sale money go into my LLC account in a 1031 exchange?
Generally the proceeds go to the qualified intermediary. Money that lands in your own account first can put the exchange at risk, so settle the wiring plan with your CPA and the intermediary before closing.
Can my lawyer or accountant be the intermediary?
The IRS says agents of the taxpayer are disqualified persons. Ask your CPA who qualifies.
Do investors do their own 1031 in a syndication?
Generally not. See the related posts and ask your own CPA.
Sources
This article is general information as of November 2026, not legal, tax, banking or investment advice. Provider details come from each provider's own public pages and official sources, read on November 3, 2026, and change often, so confirm them before you apply. Ask your own lawyer and accountant. DoorRaise is not a law firm, broker-dealer, investment adviser or funding portal.