What is a "Qualified Intermediary"??

The use of a Qualified Intermediary (QI) is required to complete an IRC 1031 tax deferred exchange. The (QI) is necessary to facilitate the 1031 exchange under treasury regulation 1031.1031(k)-1(g)(4)(iii) and they must meet the following criteria:

  • A Qualified Intermediary (QI) is a person who:

    • Is not the taxpayer​

    • Enters into a written agreement with the taxpayer (the Exchange Agreement) under which the QI:

      • Acquires the relinquished property from the taxpayer;​

      • Transfers the relinquished property;

      • Acquires the replacement property;

      • Transfers the replacement property to the taxpayer.

    • The Exchange Agreement must expressly limit the taxpayer's rights to receive, pledge, borrow, or otherwise benefits of money or other property held by the QI.

The use of an experienced QI can significantly reduce the complexity of an exchange by assuring the proper execution of required documentation.  The QI industry is not regulated nationally. Consequently, the careful selection of the QI is essential to ensure the highest levels of expertise and security of funds.