I am literally swapping a multifamily property for someone else's multifamily property, and we both want to be covered by a 1031 exchange. At the closing table, we will literally be swapping title on the two properties, and settling taxes due, rents, etc. I don't need the full services of an QI, but they all seem to want to charge both of us the full price for two exchanges, so was wondering if anyone here had any thoughts on if I should use a QI anyways or, if not how to structure things correctly.
@Josh F. Shouldn't even be a question for the nominal fee that they charge-there are way too many rules to follow and there is a large tax liability on the line if you are considering a 1031 in the first place.
@Josh F. , You're absolutely right you don't need a QI for this. You can do it. But my guess is the reason why you're hesitating is that you want to make sure it's right. You're hiring a QI to make sure your transaction meets the requirements of 1031 and will sustain an audit of the transaction. What's that worth?
@Josh F. If you are literally swapping properties then you would record the deed simultaneously and in that case you would not be required to hire a Qualified Intermediary. However, the key to successfully completing an exchange like this is the Purchase and Sale Agreement. The Agreement must clearly state that the transaction is a two party swap. Typically an attorney is hired to draft the agreement correctly and they are often more expensive than a QI. Often, investors in a two party swap choose to hire a QI to draft the agreement and use a standard PSA for cost and risk reasons.