Key Requirements for 1031 Exchange Qualified Intermediarys
IRC Section 1031 allows an accurately structured exchange enabling
any investor to trade property and reinvest the profits in a new property and
to put off all capital gain taxes. IRC Section 1031 directs that any owner of a
business or investment property may exchange that property for other like-kind
property inside a predefined mandated period and delay current recognition of
gain on the sale of the old property.
Therefore we can say that,
if the investor wants to reinvest
his/her property for the tax deferment and planning for a 1031 exchange, then
no worries we at qualifiedintermediary.com
has a team of experts that will help you in every step of the 1031 exchange
process to complete it in the best way. So before opting for 1031 Exchange, the
investor must have concise information of 1031 Exchange and who are the
specialists in this field and what are the Qualified intermediary requirements?
A brief overview of
1031 Exchange
1031 Exchange is a rule that is used for deferring capital gain taxes.
Under this process, the investor or the taxpayer sells the property (also known
as relinquished property), and the proceeds received after the sale of property
are reinvested to buy a new property ( also known as replacement property).
This helps the taxpayer in deferring the capital gain taxes within the
specified period of 180 days. Money received after the sale of the
property is kept in an escrow account, and if this cash is not allowed touch by
the investor, if this is touched, then he/she is disqualified from doing the
exchange.
Qualified Intermediary Requirements
It is necessary to involve a QI as, without
his involvement, the investor cannot directly sell a property, purchase
another, and defer capital gains taxes. IRS Section
1031 of IRS determines that neither your child nor your parents nor your
sibling can be the middle person of your 1031 Exchange. It restricts anyone
regarded as your "agent" such as your attorney, broker, CPA, or real
estate agent from
serving as your QI unless this person has not
represented you within the past two years.
Responsibilities of Qualified Intermediary in a 1031
Exchange
A Qualified Intermediary plays a vital role
in the completion of a successful 1031 exchange. Your property is sold on behalf of a qualified intermediary, then buys
the new replacement property, and finally transfers the deed to you. Qualified
Intermediary is responsible for holding the proceeds, prepare the legal
documents, and completes the transaction within the IRS guidelines. These
experts or QI's are also known as Facilitator or Accommodator.
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