A qualified intermediary is an important element in any 1031 exchange of real estate. In this article, we are going to explain the role of the qualified intermediary and discuss why you need one for your 1031 exchange of real estate.
The Importance of a Qualified Intermediary
There are many important professionals you want to have on your team when embarking on a 1031 exchange of investment real estate. You should involve your CPA or accountant, your attorney, your real estate broker, a good title company – just to name a few. Perhaps the most important professional you want to engage in a 1031 exchange is a qualified intermediary. A qualified intermediary (or QI for short) is a professional that specializes in the facilitation of like-kind exchanges under section 1031 of the Internal Revenue Code.
Your qualified intermediary can guide you through the 1031 exchange process – making sure you understand all the rules and benchmarks that you need to satisfy in order to defer your capital gains taxes. They can also help prepare important documentation during the exchange. The most important role that a QI plays is that of a neutral third-party that insulates the taxpayer conducting the exchange from receiving any of the net proceeds from the sale of the relinquished property. Taking constructive receipt of any sales proceeds would trigger taxable boot (and thus result in a partial or failed exchange). Your intermediary holds the funds on your behalf and then reinvests them into the replacement property so you can defer 100% of your capital gains taxes.
Call a Qualified Intermediary at CPEC1031, LLC to Start Your Exchange
Interested in learning more about the tax-saving potential of a 1031 exchange? Call a qualified intermediary at CPEC1031, LLC today to start the exchange! We have more than twenty years of experience working with taxpayers across the United States on 1031 exchanges of all types (forward, reverse, build-to-suit, etc.) and we can help you through the details of your like-kind exchange. You can find us at our primary Twin Cities office located in downtown Minneapolis.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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