Qualified Intermediary

Qualified Intermediary


This material is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment.

Full Transcript

When conducting a 1031 exchange, it is crucial that sellers do not take receipt of proceeds from the sale of their relinquished property. Instead, the IRS requires funds to be held by a qualified intermediary, also known as a 1031 exchange accommodator.

A qualified intermediary is an independent entity that functions much like an escrow agent and performs three tasks:

  1. Holding proceeds from relinquished property sale through closing of replacement property;
  2. Preparing required legal and closing documents; and
  3. Ensuring compliance with IRS rules.

As exchange accommodation is a largely unregulated industry, it is critical that investors choose a reputable Qualified Intermediary. Among other safeguards, important measures include utilizing segregated FDIC-insured bank accounts and carrying proper insurance to protect funds should accommodator error result in a failed exchange.

Investment Property Wealth Management® is built on making informed decisions to help protect and grow your wealth. A knowledgeable Qualified Intermediary is an essential member of your 1031 exchange team which may allow investors to focus more on potential solutions without having to worry about exchange logistics and technicalities.