ComplaintsforIPX1031 - Investment Property Exchange Services, Inc.

• Initial Complaint

  04/10/2024

  Complaint Type:

  Service or Repair Issues

  Status:

  Answered

  More info

  In July 2023 I did a 1031 exchange and used IPX 1031 out of the ******, ** office, ******************. This was the first time I have ever done a 1031 exchange, so I needed guidance on the whole process from start, middle to finish! I did not get it, at all. My goal in my exchange as like all 1031 exchanges is to try to avoid as much capital gains tax as possible - ****************** sent me emails with many attachments, told me to read them. I did read them, I also did not understand a lot of the information in these documents, so I emailed her and inquired. It was hit or miss if I got a response from ******************, and most times i would get a response from her assistant *******************************. Many times, ****************** chose to answer the questions she wanted and did not completely address the whole email. Communication was so bad. I talked to her on the phone ONCE, at the end of my transactions - just before it was happening at this point what I thought I could do was not the case and then I was advised that rolling the extra funds into the account for repairs wouldn't do much for me and would cost me more money. In my true belief, she did not want to be bothered. She was out of the office so much I couldn't keep track. I do have all the emails and times she was out/on vacation. The result of my bad representation from IPX is now I am paying in $52,800 for capital gains tax. I did not understand so many aspects of this procedure and no one cared. I would reach out and eventually they might get back to me. I have complained to ****************** and requested my fees back and was basically told I sent you literature and you should have read it. I had no idea what "boot" was and had to ask her and understand what that was on my own. She indicated this language in the initial emails sent to me - no initial phone call to ask me what my plan was or what i wanted, or to tell me if you don't buy for more money than what you're selling you will be charged capital gains. She may have said that at some point, but i did not understand. This company is awful, and I want my fees back at a minimum. No one should have to go thru what I went thru, it was a horrible experience and I had to decipher things on my own - this is what I paid them for. No guidance on so many areas, like paying down my mortgage there was no counseling to me to advise me this would cause capital gains tax. They need to make this right.

  Business response

  04/25/2024

  We regret that ************ did not have a satisfactory experience working with IPX1031.  We do, however, take exception to some of the statements and comments mentioned in her complaint.
  

  To begin, ************ stated that this was the first time she had ever done a 1031 exchange and needed guidance on the whole process from start, middle, to finish!  Our records show that ************ retained IPX1031 for an exchange twice before the current exchange on 6/19/2022 and 8/19/2022 for her entity, **************, LLC.  Although one of the exchanges was eventually cancelled, our files indicate that ************ fully understood Section 1031 and she had no major questions regarding either exchange.  In her earlier 2022 exchange boot was generated so ************ would have understood the ramifications of a partially deferred exchange having paid taxes on that amount just a year ago.  It is clear ************ was indeed familiar with the requirements of Section 1031.
  

  IPX1031 is not a tax advisor and our documents clearly state that our clients should retain the services of tax counsel or accountant to advise them through the exchange.  Nonetheless, we endeavor to provide as much information regarding Section 1031 as possible.  In our initial email to ************ on May 22,2023 we explained the rules that must be followed to obtain a 100% tax deferral.  On May 26, 2023 we sent *********** information concerning the disposition of a rental home.  We again reiterated in that email that if *********** keeps cash or buys down in value it will be considered taxable boot.
  

  We note from our records that ************ stated in an email on May 25, 2023 Sorry, I am being such a pain. All of this is so foreign to me & quite honestly I shouldve done more research before even starting!  A day later ************ acknowledged in an email that she had read much of the attachments we had sent her, but maybe I didnt read them all.? A few days later on June 2nd, ************ inquired if she could do a partial 1031 where she would pay boot on the amount left over that is not invested.  The next business day, our Sales Executive responded, As discussed any cash you keep will be the Boot, taxable against your gain, so please discuss with your accountant what the tax consequence will be.  Later that day our Sales Executive via email responded to a related party question from ************ by asking ************ to forward the response to her accountant for review and guidance on the applicable tax rules.  Again,throughout this exchange our team endeavored to answer Ms. ***** questions as accurately as possible to accommodate her exchange.  For those questions that were outside the parameters of Section 1031, we suggested ************ consult her tax accountant.
  

  Our files contain numerous instances of our staff telling ************ the ramifications of taking cash out of the exchange by not fully reinvesting all proceeds.  We also sent her a one (1)page monograph written for a ****** about Boot. Further into the exchange our sales executive suggested and offered to do a three-way call with ************ and her accountant to clear up Ms. ***** questions.  ************ did not arrange the requested call.
  

  IPX1031 believes based on it files that we comprehensively addressed all of Ms. ***** questions regarding her exchange.  Contrary to her claim to never having done an exchange before, we know that she retained our services at least twice before.  Nonetheless, we understand that ************ was not satisfied with the services we provided.  Accordingly, in the interests of good customer relations, we will agree to Ms. ***** request for a refund the full amount of the fees paid to IPX1031 for our exchange services.

  Business response

  04/26/2024

  We regret that ************ did not have a satisfactory experience working with IPX1031.  We do, however, take exception to some of the statements and comments mentioned in her complaint.
  

  IPX1031 is not a tax advisor and our documents clearly state that our clients should retain the services of tax counsel or accountant to advise them through the exchange.  Nonetheless, we endeavor to provide as much information regarding Section 1031 as possible.  In our initial email to ************ on May 22,2023 we explained the rules that must be followed to obtain a 100% tax deferral.  On May 26, 2023 we sent *********** information concerning the disposition of a rental home.  We again reiterated in that email that if *********** keeps cash or buys down in value it will be considered taxable boot.
  

  We note from our records that ************ stated in an email on May 25, 2023 Sorry, I am being such a pain. All of this is so foreign to me & quite honestly I shouldve done more research before even starting!  A day later ************ acknowledged in an email that she had read much of the attachments we had sent her, but maybe I didnt read them all.? A few days later on June 2nd, ************ inquired if she could do a partial 1031 where she would pay boot on the amount left over that is not invested.  The next business day, our Sales Executive responded, As discussed any cash you keep will be the Boot, taxable against your gain, so please discuss with your accountant what the tax consequence will be.  Later that day our Sales Executive via email responded to a related party question from ************ by asking ************ to forward the response to her accountant for review and guidance on the applicable tax rules.  Again,throughout this exchange our team endeavored to answer Ms. ***** questions as accurately as possible to accommodate her exchange.  For those questions that were outside the parameters of Section 1031, we suggested ************ consult her tax accountant.
  

  Our files contain numerous instances of our staff telling ************ the ramifications of taking cash out of the exchange by not fully reinvesting all proceeds.  We also sent her a one (1)page monograph written for a ****** about Boot. Further into the exchange our sales executive suggested and offered to do a three-way call with ************ and her accountant to clear up Ms. ***** questions.  ************ did not arrange the requested call.
  

  IPX1031 believes based on it files that we comprehensively addressed all of Ms. ***** questions regarding her exchange.  Nonetheless, we understand that ************ was not satisfied with the services we provided. Accordingly, in the interest of good customer relations, we will agree to Ms. ***** request for a refund of the full amount of the fees paid to IPX1031 for our exchange services.

• Initial Complaint

  05/04/2023

  Complaint Type:

  Product Issues

  Status:

  Answered

  More info

  I hired ****x specifically ******************* to help me with a **** exchange. I initially was skeptical whether my situational applied and was recommended by my realtor to help me make sure as they are knows as tax consultants online. **** claimed that my situation applied after explaining that I would be selling a property in ********* that I use as a rental with the hopes of converting it to a primary property that I was moving into. His bad advice costed me almost 100k in taxes this year. The company is as involved very little after this conversation and did nothing to ensure the situation I was in applied. It was basically just ***** poor and thoughtless recommendation that led to this outcome.

  Business response

  05/18/2023

  
  We have read the complaint lodged by **************** and do not agree that Investment Property Exchange Services, **** (IPX1031) was directly or indirectly responsible for ****************** misunderstanding of his exchanges requirements.  **************** did not clearly explain to any employee of IPX1031 that his plan was to buy a property to be used as his personal residence.  There is no indication that **************** ever exchanged an email or had a conversation with anyone regarding his intent to acquire a personal residence.
  

  **************** indicates in his complaint that he was skeptical about the application of his situation.  If that is accurate, the logical step would be to consult a competent tax advisor who was familiar with his situation.  The function of a qualified intermediary is to prepare the exchange documents, coordinate with the settlement officers for the properties sold and purchased in the exchange, and to safeguard the exchange funds.  IPX1031 performed all these functions for *****************   A qualified intermediary is not allowed to act as the tax advisor to its clients.  This point was made clear to **************** many times in the documents he personally executed to engage in the exchange:

  
  Important Disclosures Document (emphasis in the original document):
  Seek Technical Advice.  You are engaging in a complex legal, tax and investment transaction. The tax rules for an IRC **** exchange are strict. We strongly encourage you to seek the advice of your legal, tax and financial advisors to make sure that your exchange and the underlying real estate transactions are structured properly and that you will receive the intended results.
  

  We Cannot Give You Advice.  IPX1031, our subsidiaries, affiliates and our staff cannot provide you with legal, tax, financial or investment advice.

  
  We are Not Responsible for Tax Consequences.  You are solely responsible for the tax and legal ramifications of the exchange. We do not represent, warrant or guarantee that your exchange will qualify for tax-deferred exchange treatment under IRC ****.  Should exchange treatment be disallowed, IPX1031 will not be responsible for paying your taxes, penalties or interest.
  
              Representations in the Exchange Agreement
                         > The Exchanger represented that he had consulted with his own attorney or tax advisor regarding the requirements of Section ****.  He also acknowledged that IPX1031 was not acting as his advisor.
                          >Exchanger acknowledged in writing that he is solely responsible for all legal and tax incidences of the transactions, including compliance with Section ****.
  **************** did not notify IPX1031 of his intention to acquire a personal residence.  If he had done so, he would have been clearly told that acquisition was not allowable under Section ****.  Further, **************** was notified and agreed in numerous places that he should consult his tax advisor to assist him with his exchange.  

  Customer response

  05/18/2023

  Complaint: 20015859
  
  I am rejecting this response because: IPX1031 was careless throughout this process and had not regard to what the impacts were to me. I clearly stated I was exchanging an investment property into a personal property that I planned on living in. The issue with IPX1031 is they have poor communication, one conversation led to a bunch of forms, and I never heard from them again. They conduct their business carelessly without any regard to their clients. They also take no responsibility for the poor guidance they provide their clients. I've never experienced such poor conduct with a business in my life. All I expect is an apology and a refund despite the $100k in impacts this was to me personally.
  
  Regards,
  
  ***********************

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