How Qualified Intermediary Services facilitate 1031 Exchanges?

by Robert Taylor Real Estate Investment expert,1031 exchange

Despite the fact 1031 exchange takes place between two parties, in any case, a Qualified Intermediary is equally important. A Qualified Intermediary is a real estate firm that helps investors in finishing your 1031 exchanges. In a 1031 exchange agreement, a QI is named as the principal, that means that they buy and sell properties on behalf of the investors. Therefore, it is necessary to involve a Qualified Intermediary in 1031 exchanges.

It is also important to watch that at what time during a 1031 exchange a QI is involved. It’s recommended that an investor involve a Qualified Intermediary at the beginning of a 1031 exchange. In fact, an investor is required to enter a 1031 exchange agreement along with a Qualified Intermediary. So, what actually a Qualified Intermediary does?

Qualified Intermediary Services:

Here is the detailed explanation of the services performed by the Qualified Intermediary during the 1031 exchange process:

· When a 1031 exchange agreement takes place between the QI and a taxpayer, at this time a special document is signed by the QI in which he is named as the 'seller' of the relinquished property.

· The proceeds of the relinquished property are hold by the Qualified Intermediary, not by the investor. An exchange immediately disqualifies if the proceeds of the relinquished property are touched by the taxpayer or invests it anywhere.

· The proceeds of the relinquished property are then reinvested in the replacement property by the QI. On the closing day of the deal, a special document is signed in which the QI is named as the 'buyer' of the replacement property.

· After the completion of the exchange, the title of the property is transferred to the taxpayer without any constructive receipt of the cash obtained from the sale of the relinquished property and the money spent on the replacement property by the Qualified Intermediary.

It is evident from the obligations of a QI that in spite of the fact title to the property belongs to the taxpayer, and it’s a QI behind all the diligent work. What bothers taxpayers is the way to get hold of a good QI. After all, there are such a large number of them. It is a difficult task frankly but can be tackled by focusing on a few things.

For consultation and assistance regarding 1031 exchange expert, you can call - 888-993-2835