The Moor You Know Episode 6 | Qualified Intermediary

May 20, 2024 - Blog, Videos by

In his last episode, Stephen Moorhead went over the basics of a 1031 Exchange. That’s where a taxpayer relinquishes real estate held for investment and uses those funds to acquire replacement property without owing capital gains tax. One vital aspect of a 1031 Exchange is that it must be set up before a closing.
In this newest video, Steve focuses on another important aspect of 1031 Exchanges, a Qualified Intermediary. This is the person who holds the money from the closing of the relinquished property and continues to hold that money until the replacement property is acquired. It is critical to locate a Qualified Intermediary beforehand. Virtually any person or business not affiliated with the taxpayer or the transaction can qualify. Once the Qualified Intermediary is located and the exchange agreement is prepared that governs the relationship and includes how the money will be distributed, the proceeds of the real estate sale are placed with them. After the first closing, the exchanger has 45 days to identify other like kind property and then 180 days to close on that property. These dates are critical, and without complying with them the exchange fails. Up to three properties can be identified for consideration without considering value and more than three by complying with certain complicated rules. By engaging a Qualified Intermediary before closing and complying with the timelines, an exchange can be successful.
Take two short minutes to learn more about how Qualified Intermediaries are vital to a successful 1031 Exchange.