Can You Do A 1031 Exchange Without A Qualified Intermediary?

In most 1031 exchanges, the use of a qualified intermediary is required because investors are relinquishing and replacing property with multiple other parties. For example, Investor A sells his relinquished property to Investor B, but then purchases replacement property from Investor C.

In such cases, in order to qualify for IRS “safe harbor” the parties must follow established procedures which include the use of a qualified intermediary, the use of qualified escrow accounts for temporarily holding “exchanged funds” and other procedures that the IRS has previously approved.

In limited cases an exchange can occur without the services of an Intermediary, such as when parties to the exchange are willing to exchange deeds or enter into an Exchange Agreement with each other. However, this type of exchange is quite uncommon because in the typical 1031 transaction, the seller of the replacement property is not also the buyer of the investor’s relinquished property.

To learn more about 1031 exchanges or our qualified intermediary and replacement property locator services, please visit our website.