1031 Intermediaries

Written by Linda Alexander
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Accomodators, also known as facilitators or 1031 intermediaries, are the key contacts in a 1031 exchange. Without them, you cannot complete the exchange. When you begin a 1031 exchange, you must select a qualified intermediary to draft the agreements, document the transaction, and actually facilitate the sale and purchase of your properties, as well as hold the funds during the exchange.

Escrow Intermediaries

Technically, you cannot touch any of the money you receive from your sale before reinvesting it into a new property. To do so would disqualify your transaction under the 1031 rules. Therefore, 1031 intermediaries are necessary. They play a central role in the exchange process.

The IRS requires that the person or entity who you chose as your qualified intermediary (QI) cannot have any legal or family relationship with you, nor can they be your real estate agent. Therefore, there are professionals who make their living solely as qualified intermediaries. These specialists are ready to assist you any time you are ready to trade up your property and defer your capital gains taxes.

The QI must restrict your rights to the exchange funds from the sale of your property. They then must transfer the money to the buyer, acquire the replacement property for you from the seller, and finally transfer it to you, the exchangor. It is important to stay in touch with your intermediary throughout the exchange process so you stay abreast of the progress of your exchange.

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