A Qualified Intermediary (“QI”) is an independent party who facilitates tax-deferred exchanges pursuant to Section 1031 of the Internal Revenue Code. The QI cannot be the taxpayer or a disqualified person. Acting under a written agreement with the taxpayer, the QI acquires the relinquished property and transfers it to the buyer. The QI will hold the sales proceeds to prevent the taxpayer from having actual or constructive receipt of the funds. Finally, the QI acquires the replacement property and transfers it to the taxpayer to complete the exchange before the end of the exchange period.
While many people have an understanding of a like-kind exchange, we have found it is in the best interest of clients to specialize in this area because there are so many traps for the unwary. This is a highly technical subject area and after assisting hundreds of clients with this one type of transaction we “can see around corners” and help you troubleshoot problems before they exist.
Under 1031, all real property (as it is defined by state law) is considered “like-kind” with other real property of the same nature and quality. The following are examples of qualified “like-kind” real property exchanges:
ES Group provides guidance, information and critical timelines throughout the entire exchange.