Hello. Please advise! Do you HAVE to use a Qualified Intermediary for an exchange? I know you don't need one for a swap, but that is not my case. I am selling one property and purchasing another. I might be able to close on both on the same day. But everywhere I look, it says you MUST use a QI except for a swap if you want the IRS to allow it. Anybody have personal experience with this?
Hi @Kristin Kiddy ,
Yes, you must have a Qualified Intermediary involved even with two party swaps. It is possible to use one of the other parties involved in the transaction (the buyer of your relinquished property or the seller of your replacement property) to act as the QI rather than a professional/institutional QI, but the costs of drafting the exchange documents would probably be more expensive than just hiring a professional/institutional QI.
@Kristin Kiddy , Even in the briefest of moments in between sale and purchase while the escrow officer picks up a fresh pen you will have constructive receipt of the funds without a QI documentation on the settlement statements. I don't think you'd want the extra negotiation issue of trying to get your buyer or seller to accept the fiduciary and statutory role of facilitating the exchange.