If you’ve heard of a 1031 exchange, you may have heard of a qualified intermediary. But many people don’t have a solid understanding of what an intermediary actually does. In this article, we are going to discuss the important role that the qualified intermediary plays in a 1031 exchange of real estate.
What is a Qualified Intermediary?
A qualified intermediary is a neutral third-party who facilitates like-kind exchanges of property under section 1031 of the Internal Revenue Code. There are many benefits to working with a qualified intermediary, including:
Getting Your Questions Answered. Your intermediary will be on hand to answer any questions you might have throughout the process.
Preparing Your Documents. There are a lot of documents you need to bring to the closing table in a 1031 exchange. Your intermediary will prepare all of these documents to ensure a smooth closing.
Insulating You From Proceeds. In a 1031 exchange, you cannot under any circumstances receive any of the sales proceeds from your relinquished property. If you do, you will need to pay taxes on those proceeds. A qualified intermediary can insulate you from receiving these proceeds by holding it for you in an escrow account before transferring it over into your new replacement property.
These are just a handful of the many benefits of having a qualified intermediary by your side during your 1031 exchange.
Twin Cities 1031 Exchange Company
At CPEC1031, we are fully equipped to facilitate your exchange of commercial property. Contact us today at our downtown Minneapolis office to get started with your 1031 exchange and start realizing the tax-saving benefits of a like-kind exchange.
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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