Involving a qualified intermediary is an essential step in the 1031 exchange process. Your intermediary is the key to helping you avoid receipt of the sales proceeds so you can defer all of your capital gains taxes on your sale. Additionally, your intermediary acts as your guide and protects your interests during the exchange. But not everyone can act as your qualified intermediary. In this article, we are going to explain who is considered a related party in a 1031 exchange.
Related Parties
The IRS restricts “related parties” from acting as qualified intermediaries on a taxpayer’s 1031 exchange. But what exactly is a related party? Essentially, anyone who is related to the taxpayer by blood or business affiliation is not allowed to act as the qualified intermediary. Here is a list of related parties that would be barred from acting as your intermediary:
Your mother, father, siblings, or other blood relatives
Your employee
Your accountant, lawyer, or CPA that has acted on your behalf over the past two years
Finding the right qualified intermediary is important. Look for someone who is well-reviewed, and well regarded in the industry. Someone with years of experience and specifically experience facilitating exchanges in your area is also a plus.
Save Money when Selling Real Estate
If you are looking to defer your taxes when selling real estate, a 1031 exchange is the tool you need. Our qualified intermediaries have been working with clients all over the country on their like-kind exchanges for the past twenty years. We can help you with your 1031 documentation, identification of replacement property, and more. Contact us today at our downtown Minneapolis office to learn more about our services and how we can help you save money on your next sale of real estate.
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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