1031 Exchanges: What Is a Qualified Intermediary?

When doing a 1031 exchange, you will have to work with a qualified intermediary. The qualified intermediary serves the facilitator. They will sign an agreement to help you purchase and transfer the property, and then acquire the replacement property and transfer it for you.

The Duties of a Qualified Intermediary

The qualified intermediary has several duties that they complete on your behalf. The main duty is that they coordinate the sale of your existing property and use the funds from the sale to acquire the new property and transfer it to you. These acquisitions require the qualified intermediary to handle the documentation, be in contact with the title companies, handle the funding and applying it accordingly and complete tax paperwork for parties involved. Essentially, the intermediary handles the exchange from beginning to end.

The qualified intermediary must be well versed in real estate transactions and IRS rules in regards to 1031 Exchanges. In addition, they should be able to provide references, insurance and an error and omissions statement to protect you from any fraud or negligence.

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