Tips for Working With Your Qualified Intermediary

Qualified Intermediary Tips

What are some tips for working with a qualified intermediary during your 1031 exchange? The qualified intermediary has a difficult job in that oftentimes they get pulled into a transaction late in the process and have to work quickly to gather the information and details needed to draft the 1031 documents and closing instructions.

Start Your Exchange Early

The first step is to start early to engage your qualified intermediary at about the same time that you're signing the sale agreement for the sale of your relinquished property. Sometimes people want to sit on the sidelines and not engage their intermediary until they know the buyer is going to preform and close. They may say “I'm going to wait until the inspection period is over, or I’m going to wait until the buyer waives all their contingencies.”

But the problem with waiting until the eleventh hour is it can be a real fire drill to gather all the information and details necessary for the intermediary to properly draft and tailor make the 1031 documents specific to your situation.

What to Provide Your Intermediary

Tip one is to start early and to provide the intermediary with the particulars for the taxpayer such as:

  • Their address
  • Their tax ID number or social security number
  • The name and contact information of the title closer or escrow company
  • The specifics about the property that's being sold such as the address, legal description, and how you’re vested in title

By teeing up the exchange early you give the intermediary time to prepare and coordinate with the title company or escrow company that’s closing the transaction. If you wait until the last minute you may not get the best product or service and it can be very upsetting and stressful to the other parties in the transaction that may have to change their documentation or respond to this unforeseen change in the plan and that can be stressful for everyone.

  • 1031 Hotline: If you have questions about keeping your exchange funds secure, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.


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