Is it possible to change my qualified intermediary (QI) after the 1031 exchange has been initiated, and funds have been transferred to the QI?
Err on the Side of Safety
To be on the safe-side, if you have already initiated your 1031 exchange and transferred funds, you should stick with the qualified intermediary that you started with.
According to § 1.1031(k)-1(g)(4) (iii), a qualified intermediary is a person who:
- Is not the taxpayer or a disqualified person (as defined in paragraph (k) of this section), and
- Enters into a written agreement with the taxpayer (the “exchange agreement”) and, as required by the exchange agreement, acquires the relinquished property from the taxpayer, transfers the relinquished property, acquires the replacement property, and transfers the replacement property to the taxpayer.
QI Requirements for a 1031 Exchange
As per this regulation, the qualified intermediary must have entered into an exchange agreement and been a conduit on both the Relinquished Property and Replacement Property. Once the qualified intermediary has facilitated the exchange out of the Relinquished Property, then they are the only party that can satisfy the rule and fulfill the function of qualified intermediary.
- 1031 Hotline: If you have questions about qualified intermediaries in a 1031 exchange, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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