Limits On Who Can Be Your Qualified Intermediary

When you want to complete a 1031 exchange and need to delay the acquisition of replacement property after you sell your relinquished property, you will need to use the services of a qualified intermediary. This is the individual who will temporarily hold the sale proceeds until closing occurs on the replacement property. This role is non-negotiable with a delayed exchange in the eyes of the IRS.

But who can perform qualified intermediary services?

Many inexperienced 1031 exchange investors attempt to use their own realtors, lawyers or certified public accountants. However, this is not permitted under IRS code. According to the IRS, the qualified intermediary must be an “independent, third-party” who will facilitate the exchange.

This means that your network of professionals, including lawyers and real estate agents, are off-limits when it comes to performing the qualified intermediary role. Using them will jeopardize the overall exchange. To ensure the legitimacy of your exchange, it is important to seek out the services of an experienced and independent qualified intermediary.

Learn more about selecting a qualified intermediary here.

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