Qualified Intermediaries and 1031 Exchange Experts

When entering into a Section 1031 tax-deferred exchange, the IRS requires that the proceeds from the sale of your old (Relinquished) property be held by a Qualified Intermediary (QI) until you buy your new (Replacement) property. In a typical transaction, the property owner is taxed on any gain realized from the sale. However, through a Section 1031 Exchange, the tax on the gain is deferred until some future date.

As an established QI, it is our job to make sure your 1031 exchange complies with current law so that the potential capital gains tax is deferred and that your funds remain safe until utilized.

When the taxpayer engages the services of a QI, pursuant to an exchange agreement, the IRS does not consider the taxpayer to be in receipt of the funds. The sale proceeds go directly to the QI, who holds them until they are needed to acquire the replacement property. The QI then delivers the funds directly to the closing agent who deeds the property directly to the taxpayer.

Without a QI, and pursuant to an exchange agreement, the IRS may not define a transaction as an exchange, thereby making it ineligible for tax deferment status.