--- title: Primary Functions of a Qualified Intermediary description: A Qualified Intermediary plays an integral role in creating a smooth exchange process and making sure that you meet the IRS guidelines. image: https://www.realized1031.com/hubfs/Images/photo/abstract/signing-paper-advice-optimized-is1034279702-1.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap) - [Our Process](https://www.realized1031.com/how-realized-works) - [Financial Advisors](https://www.realized1031.com/advisor) - [Resources](https://www.realized1031.com/resources) - [The Company](https://www.realized1031.com/about-us) - [Articles](https://www.realized1031.com/blog) [Register](https://www.realized1031.com/marketplace) [Log In](https://www.realized1031.com/login) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # Primary Functions of a Qualified Intermediary Posted Aug 8, 2019 ![signing-paper-advice-optimized-is1034279702-1](https://www.realized1031.com/hs-fs/hubfs/Images/photo/abstract/signing-paper-advice-optimized-is1034279702-1.jpg?width=750&height=392&name=signing-paper-advice-optimized-is1034279702-1.jpg) In previous articles, we have discussed the importance of using a Qualified Intermediary in a 1031 exchange. A Qualified Intermediary plays an integral role in creating a smooth exchange process and making sure that you meet the IRS guidelines. There are a variety of duties they are responsible for handling, ranging from preparing relevant documentation to holding thousands (or even millions) of dollars in proceeds in an insured account. In this article, we will discuss the various duties of a Qualified Intermediary so that you can ensure they are truly doing their part on your behalf.   ### 1. Advising on 1031 Exchange Requirements One of the most important (and stressful!) aspects of a 1031 exchange is meeting the strict deadlines. Your Qualified Intermediary will play an integral role in keeping you on track to meet all deadlines and helping you submit the necessary documentation. *45-Day Identification Period* After selling the initial property in a 1031 exchange (referred to as the “relinquished property”), you will have 45 days to identify a new property (referred to as a “replacement property”) to secure the exchange. This period of time is known as the “identification period.” The documents must be signed and delivered to the individuals handling your exchange by the 45th day after closing on your relinquished property, even if that day is a holiday or weekend. *180-Day Close Period* Your Qualified Intermediary will meet with you to verify that you meet all identification requirements. After your replacement property has been identified, you will then have 180 days from that point to close on the property. These dates cannot be extended under any circumstances, unless there is a natural disaster that affects the properties involved.  *Three Property Rule* When identifying a property, you may find that you can’t decide between a number of properties. If that is the case, you are allowed to identify up to three properties that you plan on purchasing in the 1031 exchange. Bear in mind that you do not have to purchase all three of these properties–you can just move forward with one or two if you choose–but you are allowed to identify up to three. *200% Rule* There is one exception to this, which is referred to as the 200% Rule. This means that if the combined value of all three properties does not exceed 200% of the sale value of your original property, you can identify more than three properties. For example, if you sell a multifamily building for $2M, you can identify more than three properties in the exchange as long as the combined value doesn’t exceed $4M. *95% Rule* There are some caveats to this 200% Rule, which is why many investors shy away from identifying more than three properties at a time. The caveat, referred to as the 95% Rule, states that if you choose to identify more than three properties, you must close 95% of the value of all combined properties within 180 days, or you will be required to pay capital gains tax to the IRS. Closing on several properties in such a short time frame can be intimidating to many investors, which is why they typically tend to shy away from going this route.   ### 2. Holding Exchange Proceeds When the relinquished property is sold in a 1031 exchange, you as the investor are not allowed to have access to the bank account holding the funds until after the replacement property has been identified and the sale is closed. As a result, the Qualified Intermediary will be responsible for holding the exchange proceeds in a highly-rated FDIC-insured bank account. When the relinquished property is closed, an investor will assign the bill of sale to the Qualified Intermediary and will hold the funds until the replacement property’s closing.   ### 3. Preparing Relevant Exchange Documents The Qualified Intermediary will also prepare all required exchange documents and confirm their validity, including an Exchange Agreement, Assignments of Purchase, Sale Agreements, and any other documents relevant to the exchange. Two important details to note: your Qualified Intermediary may be holding millions of dollars in proceeds, so it is important to verify that your funds are being held in a separate, highly-rated, FDIC-insured bank account. Additionally, a Qualified Intermediary must be an independent party to the exchange and should not give any investment advice to you, as that is not their responsibility or their area of expertise. When hiring a Qualified Intermediary, it is important to work with someone who is organized and has an in-depth understanding of the process. This will help make the complicated 1031 exchange process far more manageable for you and everyone involved. *To learn more about working with a Qualified Intermediary, call us at 512.871.0315.* Learn How To Find A Qualifed Intermediary [![Download The Guidebook To QI's](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/QI-eBook-250.png?width=250&height=250&name=QI-eBook-250.png "Learn How To Choose The Right ...") ](https://www.realized1031.com/blog/primary-functions-of-a-qualified-intermediary#blogform) Download eBook ---   --- ### Download The Guidebook To QI's ![Learn How To Find A Qualifed Intermediary](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/QI-eBook-550.jpg?width=550&height=650&name=QI-eBook-550.jpg) Learn How To Choose The Right Qualified Intermediary. By providing your email and phone number, you are opting to receive communications from Realized. If you receive a text message and choose to stop receiving further messages, reply STOP to immediately unsubscribe. Msg & Data rates may apply. To manage receiving emails from Realized visit the Manage Preferences link in any email received. Search ### [Why Realized](https://www.realized1031.com/why-realized) - [Wealth Management](https://www.realized1031.com/the-wealth-management-gap) - [Why Realized](https://www.realized1031.com/why-realized) - [Our Process](https://www.realized1031.com/how-realized-works) - [Scenarios](https://www.realized1031.com/scenarios) - [Private Client Program](https://www.realized1031.com/private-client) - [Realized Exchange Services](https://www.realized1031.com/realized-exchange-services) ### [The Company](https://www.realized1031.com/about-us) - [The Team](https://www.realized1031.com/about-us) - [FAQ](https://www.realized1031.com/frequently-asked-questions) - [Testimonials](https://www.realized1031.com/testimonials) - [Press](https://www.realized1031.com/press) - [Careers](https://www.realized1031.com/careers) ### [Partners](https://www.realized1031.com/partners) - [Financial Advisors](https://www.realized1031.com/advisor) - [Broker Dealers](https://www.realized1031.com/partners/broker-dealers) - [Real Estate Agents](https://www.realized1031.com/partners/real-estate-agents) - [Certified Public Accountants](https://www.realized1031.com/partners/certified-public-accountants) ### [Resources](https://www.realized1031.com/resources) - #### Learn - [Articles](https://www.realized1031.com/blog) - [Glossary of Terms](https://www.realized1031.com/glossary) - [Capital Gains Tax Rates](https://www.realized1031.com/capital-gains-tax-rate) - #### Watch - [Video Library](https://www.realized1031.com/videos) - [Webinar Archive](https://www.realized1031.com/webinars) - #### Read - [Delaware Statutory Trust](https://www.realized1031.com/delaware-statutory-trust) - [Tenants-In-Common](https://www.realized1031.com/tenants-in-common-tic) - [1031 Exchange](https://www.realized1031.com/1031-exchange) - [Qualified Intermediary](https://www.realized1031.com/qualified-intermediary) - [Qualified Opportunity Zones](https://www.realized1031.com/opportunity-zones) #### Realized - 500 W 13th Street Austin, TX 78701 - (877) 797-1031 ##### [Contact Us](https://www.realized1031.com/contact-us) - [![Realized on Facebook](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-facebook-whiterev.png?width=60&height=60&name=social-facebook-whiterev.png)](https://www.facebook.com/Realized/) - [![Realized on LinkedIn](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-linkedin-whiterev.png?width=60&height=60&name=social-linkedin-whiterev.png)](https://www.linkedin.com/company/realized/) - [![Realized on YouTube](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-youtube-whiterev.png?width=60&height=60&name=social-youtube-whiterev.png)](https://www.youtube.com/c/Realized1031?sub_confirmation=1) - [![Realized Holdings, Inc. BBB Business Review](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/bbb/RZH2-bbb-seal.png?width=40&height=65&name=RZH2-bbb-seal.png)](http://www.bbb.org/central-texas/business-reviews/real-estate-investors/realized-holdings-llc-in-austin-tx-1000112948/#bbbonlineclick) - [![FEA Logo](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/fea/RZH2-fea-logo.png?width=82&height=65&name=RZH2-fea-logo.png "FEA Logo")](https://www.1031.org) SECURITIES DISCLOSURE Realized1031.com is a website operated by Realized Technologies, LLC, a wholly owned subsidiary of Realized Holdings, Inc. (“Realized Holdings”). Securities and/or Investment Advisory Services may be offered through Registered Representatives or Investment Advisor Representatives of Realized Financial, Inc. ("Realized"), a broker/dealer, member [FINRA](https://www.finra.org)/[SIPC](https://www.sipc.org/), and registered investment adviser. Realized is a subsidiary of Realized Holdings, Inc. ("Realized Holdings"). Check the background of this firm on [FINRA's BrokerCheck](https://brokercheck.finra.org/firm/summary/22333). Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment. Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments are often sold by prospectus that discloses all risks, fees, and expenses. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain and should not be deemed a complete investment program. The value of the investment may fall as well as rise and investors may get back less than they invested. This site is published for residents of the United States who are accredited investors only. Registered Representatives and Investment Advisor Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all of services referenced on this site are available in every state and through every representative listed. For additional information, please contact the Realized Compliance department at 512-472-7171 or info@realized1031.com. - [Terms & Conditions](https://www.realized1031.com/terms-and-conditions) - [Privacy Policy](https://www.realized1031.com/privacy-policy) - [Form CRS](https://www.realized1031.com/hubfs/common-files/disclosures/FormCRS.pdf) - [ADV 2A](https://www.realized1031.com/hubfs/common-files/disclosures/ADV2A.pdf) - [Reg BI Disclosures](https://www.realized1031.com/hubfs/common-files/disclosures/RegBI.pdf) -   © 2026 Realized Holdings, Inc. ```json { "@context" : "http://schema.org/", "@type" : "BlogPosting", "articleBody" : "In previous articles, we have discussed the importance of using a Qualified Intermediary in a 1031 exchange. A Qualified Intermediary plays an integral role in creating a smooth exchange process and making sure that you meet the IRS guidelines. There are a variety of duties they are responsible for handling, ranging from preparing relevant documentation to holding thousands (or even millions) of dollars in proceeds in an insured account. In this article, we will discuss the various duties of a Qualified Intermediary so that you can ensure they are truly doing their part on your behalf. 1. Advising on 1031 Exchange Requirements One of the most important (and stressful!) aspects of a 1031 exchange is meeting the strict deadlines. Your Qualified Intermediary will play an integral role in keeping you on track to meet all deadlines and helping you submit the necessary documentation. 45-Day Identification Period After selling the initial property in a 1031 exchange (referred to as the “relinquished property”), you will have 45 days to identify a new property (referred to as a “replacement property”) to secure the exchange. This period of time is known as the “identification period.” The documents must be signed and delivered to the individuals handling your exchange by the 45th day after closing on your relinquished property, even if that day is a holiday or weekend. 180-Day Close Period Your Qualified Intermediary will meet with you to verify that you meet all identification requirements. After your replacement property has been identified, you will then have 180 days from that point to close on the property. These dates cannot be extended under any circumstances, unless there is a natural disaster that affects the properties involved. Three Property Rule When identifying a property, you may find that you can’t decide between a number of properties. If that is the case, you are allowed to identify up to three properties that you plan on purchasing in the 1031 exchange. Bear in mind that you do not have to purchase all three of these properties–you can just move forward with one or two if you choose–but you are allowed to identify up to three. 200% Rule There is one exception to this, which is referred to as the 200% Rule. This means that if the combined value of all three properties does not exceed 200% of the sale value of your original property, you can identify more than three properties. For example, if you sell a multifamily building for $2M, you can identify more than three properties in the exchange as long as the combined value doesn’t exceed $4M. 95% Rule There are some caveats to this 200% Rule, which is why many investors shy away from identifying more than three properties at a time. The caveat, referred to as the 95% Rule, states that if you choose to identify more than three properties, you must close 95% of the value of all combined properties within 180 days, or you will be required to pay capital gains tax to the IRS. Closing on several properties in such a short time frame can be intimidating to many investors, which is why they typically tend to shy away from going this route. 2. Holding Exchange Proceeds When the relinquished property is sold in a 1031 exchange, you as the investor are not allowed to have access to the bank account holding the funds until after the replacement property has been identified and the sale is closed. As a result, the Qualified Intermediary will be responsible for holding the exchange proceeds in a highly-rated FDIC-insured bank account. When the relinquished property is closed, an investor will assign the bill of sale to the Qualified Intermediary and will hold the funds until the replacement property’s closing. 3. Preparing Relevant Exchange Documents The Qualified Intermediary will also prepare all required exchange documents and confirm their validity, including an Exchange Agreement, Assignments of Purchase, Sale Agreements, and any other documents relevant to the exchange. Two important details to note: your Qualified Intermediary may be holding millions of dollars in proceeds, so it is important to verify that your funds are being held in a separate, highly-rated, FDIC-insured bank account. Additionally, a Qualified Intermediary must be an independent party to the exchange and should not give any investment advice to you, as that is not their responsibility or their area of expertise. When hiring a Qualified Intermediary, it is important to work with someone who is organized and has an in-depth understanding of the process. This will help make the complicated 1031 exchange process far more manageable for you and everyone involved. To learn more about working with a Qualified Intermediary, call us at 512.871.0315.", "articleSection" : [ "Qualified Intermediaries" ], "author" : { "@type" : "Person", "email" : "marketing@realized1031.com", "image" : "", "name" : "The Realized Team", "url" : "https://www.realized1031.com/blog/author/the-realized-team" }, "dateModified" : "2020-12-02T22:11:05+0000", "datePublished" : "2020-12-02T22:11:05+0000", "description" : "A Qualified Intermediary plays an integral role in creating a smooth exchange process and making sure that you meet the IRS guidelines. ", "headline" : "Primary Functions of a Qualified Intermediary", "image" : { "@type" : "ImageObject", "height" : 422, "url" : "https://cdn2.hubspot.net/hubfs/733513/Images/photo/abstract/signing-paper-advice-optimized-is1034279702-1.jpg", "width" : 750 }, "mainEntityOfPage" : "https://www.realized1031.com/blog/primary-functions-of-a-qualified-intermediary", "name" : "Primary Functions of a Qualified Intermediary", "publisher" : { "@type" : "Organization", "address" : { "@type" : "PostalAddress", "addressCountry" : "USA", "addressLocality" : "Austin", "addressRegion" : "TX", "postalCode" : "78701", "streetAddress" : "500 W 13th Street " }, "logo" : { "@type" : "ImageObject", "height" : 60, "url" : "http://www.realized1031.com/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black-No-Margin-296x60-AMP.png", "width" : 296 }, "name" : "Realized" }, "thumbnailUrl" : "https://cdn2.hubspot.net/hubfs/733513/Images/photo/abstract/signing-paper-advice-optimized-is1034279702-1.jpg" } ```