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Can a Bank be a Qualified Intermediary?
An essential part of the 1031 exchange is the inclusion of a qualified intermediary, or QI. That QI could be considered the cornerstone of a successful exchange; its job is to hold proceeds from the sale of the relinquished property, until closing on the replacement property. If you are the exchanger in the process, your QI ensures you never touch those funds.
What is a Non-Qualified Intermediary?
Anyone embarking on the 1031 exchange process understands that an independent entity, responsible for facilitating transfer of the proceeds, is necessary to ensure a successful property swap. Known as the Qualified Intermediary (QI) or sometimes, accommodator, this entity takes control of the funds, from the moment the relinquished property is sold, until the purchase of the replacement property.
Does a 1031 Qualified Intermediary Have to Reside in the Same State Where the Original Property Was Sold?
For an investor engaged in a 1031 exchange transaction, the Qualified Intermediary's correct utilization is one of the key elements to success. The Qualified Intermediary, sometimes referred to as a 1031 exchange accommodator, is an independent entity that facilitates the transfer of proceeds from the sale of the relinquished property into a holding account and from the holding account to the purchase of the replacement property. This intervention is essential to avoid the taxpayer having control over the funds between the sale of the original property and purchase of the replacement.
How to Properly Vet a Qualified Intermediary
For a taxpayer seeking to defer recognition of capital gains by completing a 1031 exchange, one of the key determinants of success is often in the selection of the Qualified Intermediary (QI) used to facilitate the transactions. The reason for the importance of this role is the crucial tasks for which the QI is responsible. Mistakes by a Qualified Intermediary can result in the IRS disallowing the deferral.
Industry Trends for Qualified Intermediaries to Consider as Filing Deadline Approaches
As we approach the July 15, 2020, Internal Revenue Services filing deadline amidst the global pandemic, our team at Realized wanted to share some thoughts and statistics that we are seeing in the market. Our goal with this data is to help Qualified Intermediaries (QIs) and their clients better navigate the next three weeks leading up to the deadline.
When Can I Get My Money Back From A Qualified Intermediary?
Many changes can take place during the 1031 exchange process. Perhaps the deal falls through on the identified property, or the exchanger decides not to move forward with the exchange altogether. Whatever the case may be, the next question an exchanger will inevitably ask is: when can I get my money back?
What Happens if Your Qualified Intermediary Files Bankruptcy?
When you’re trying to close on the sale of a property the last thing you’re probably thinking about is choosing a qualified intermediary (also referred to as an “accommodator” or “facilitator”) for a 1031 exchange. It’s so easy to go with the 1031 exchange accommodator suggested by your title company, real estate broker, attorney, friend, uncle, etc. After all, if your 1031 funds are held by a reputable qualified intermediary, there’s no need to worry, right?
Qualified Intermediary Fees
You have just closed on your property and are looking to execute a 1031 exchange. Per IRS regulations, you need to establish a Qualified Intermediary (QI) and record another expense to complete the transaction. Although many other fees related to the transaction are standard and well-defined, it can be frustrating to gauge the cost for the services of a Qualified Intermediary. In order to understand what amounts to an appropriate fee owed to a QI, it is important to consider the services the QI provides and the risks it encounters in helping to execute a 1031 exchange.
Who Can Be Your Qualified Intermediary?
Consider this scenario for a moment: you recently sold a property and are preparing to enter into a 1031 exchange. You have everything in place, but soon learn that it is required to establish a Qualified Intermediary (QI) to complete the exchange – per IRS regulations. Who do you turn to?
Primary Functions of a Qualified Intermediary
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.
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