1031 Exchange Accomodators & Qualified Intermediaries (QI)

The Role of Qualified Intermediary (QI) In A 1031 "Like Kind" Exchange
Section 1031 of the Internal Revenue Code (IRC) offers a great opportunity for real estate buyers to defer the capital gains tax liability associated with the sale of a business or investment asset. The 1031 exchange ensures the maximum return on investments to people of all financial backgrounds. To qualify for 1031 "like kind" property exchange the entire transaction has to be done in accordance to the detailed rules, regulations and compliance issues set forth in the US (IRS) tax code.

The (QI), also known as a facilitator or exchange accommodator the Qualified Intermediary (QI) serves a crucial function under the Internal Revenue (IRS) Code. Choosing an Intermediary to facilitate the 1031 exchange is usually the first and one of the most important steps. The Qualified Intermediary (QI) should be a company that works on a full-time business of facilitating 1031 exchanges. The Internal Revenue (IRS) Code requires that the person or entity serving as (QI) cannot be someone with whom the exchanger has had a former business or family relationship prior to the transaction. The IRS code is clear in the fact that a (QI) has to be an independent organization whose only contact with the exchanger is to serve him as a Qualified Intermediary (QI).

Forward Delayed Exchange
A type of exchange which occurs when a property is sold "Relinquished Property" and another property is purchased "Replacement Property" within 180 days following the sale of the Relinquished Property.

Relinquished Property
The original property being sold by the taxpayer when making a 1031 exchange.
Replacement Property
Is the new property being acquired by the taxpayer when making a 1031 exchange.

Reverse Exchanges
This is the type of exchange in which the Replacement Property is purchased before the sale of the Relinquished Property.

 

   A 1031 tax deferred real estate exchange accommodator
                     Reprinted with permission