The Role of the QI (Qualified Intermediary), Part 4

The questions here were received from interested 1031 exchangers visiting my website. I have chosen to leave the questions intact with their ambiguity, shorthand writing and misspellings so as not to act on the assumption as to what when unclear the questioner meant.

The Role of the QI (Qualified Intermediary), Part 4

Looking to do a 1031 exchange deal? A qualified intermediary is critically important. Without the qualified intermediary, the deal won't work. You'll end up without a successful result.

But there's another wrinkle here, too. Your qualified intermediary has to be free of any conflict of interest. You should not use a family member or your personal attorney or someone else like that to be your QI. That's a recipe for disaster. You can find out more in specific Treasury regulations regarding the subject.

Question 1:
Questions: \nConsidering selling rental home in California and buying a condo in Naples for $1,500,000.\n1. How to obtain maximum security with escrow account?\n2. Does exchange have to be completed in tax year?\n3. Do all potential properties have to be identified before close?\n

Answer:
A qualified intermediary will help you to get maximum security for your exchange funds. Ask if the Q.I. is bonded? All potential properties have to be identified within 45 days of close. When you close on all properties before 45 days you have no need to file the ID’s. If for whatever reason you are unable to purchase any property identified — you pay Uncle Sam the taxes.

If your exchange window goes into the following tax year — you need to get an extension and file your taxes after you close your 1031 exchange.

Question 2:
can you email me a form to use to designate a replacement property.

Answer:
Your QI can help you with forms, but if you do not have a qualified intermediary, you do not have a deal. If you have gone to settlement and have constructive receipt of the funds, you have lost your ability to do an exchange. Get the necessary paperwork from your QI before you go to settlement and file with the QI the properties you want to purchase by the end of the 45 day identification period.

Question 3:
I need to set up a 1031 excvhange

Answer:
I can provide you with contact to a qualified intermediary who I trust and have used for many years. They will help you to complete the deal.

About Marilee: Role of Marilee Hill, Registered Representative (RR)

Marilee Hill has a lot of experience with 1031 deals and understands the people side of the business too. She does not charge for her advice, but does not act as a qualified intermediary herself. Ms. Hill is a registered representative with series 7 licensing and experience searching for and evaluating securitized replacement properties. Ask Ms. Hill about costs for QI services and how to go about a 1031 exchange deal.

The Role of the QI (Qualified Intermediary), Part 3

The questions here were received from interested 1031 exchangers visiting my website. I have chosen to leave the questions intact with their ambiguity, shorthand writing and misspellings so as not to act on the assumption as to what when unclear the questioner meant.

The Role of the QI (Qualified Intermediary), Part 3

When you're trying to do a 1031 exchange, having a qualified intermediary is important. It’s so critical to the deal that a deferred exchange flunks without a QI. Among multiple pieces of paper the Qualified Intermediary provides you the confirmation documentation that the IRS requires.

Treasury regulations show why a QI is required, and what kinds of eligibility restrictions there are. Most of these restrictions deal with self-dealing and conflicts of interest – generally, you cannot use a family member or someone who has been working for you for a long period of time in some general role such as your personal attorney or CPA. Aside from this, your choice of QI is pretty wide open.

Question 1:
If exchanging property from Texas to California does it matter which state the 1031 coordinator is in?

Answer:
The 1031 coordinator can be in any state, as long as your property is like kind, and that includes having both properties be in the U.S.

Question 2:
I have two properties I'm going to be selling soon so I can buy an apartment. The properties are in California and the Apartment I want to buy will most likely be purchased in in Texas. I had questions about the cost, and what my options are. Thanks.

Answer:
You're generally on solid ground with a Texas to California exchange, as long as properties are like kind. You have to work with 1031 exchange time guidelines and a Qualified Intermediary – normal fees are $600-$1000, but in this case, the QI might have to do two separate deals which may increase the cost.

About Marilee: Role of Marilee Hill, Registered Representative (RR)

Get free advice from Marilee Hill about a 1031 exchange process before going to a Qualified Intermediary. Marilee Hill has 20 years experience in the business and is a Registered Representative with a series 7 license qualifying her to provide properties for Accredited Investors governed by Reg D of the Security Act of 1933. She knows about the technical side of the business and the people side of the business as well. Marilee Hill has a lot of experience navigating these kinds of deals and consulting clients to stay on the good side of the IRS. Don't be afraid to ask her about a deal that you're dreaming up.

Role of Marilee Hill, Registered Representative

The questions here were received from interested 1031 exchangers visiting my website. I have chosen to leave the questions intact with their ambiguity, shorthand writing and misspellings so as not to act on the assumption as to what when unclear the questioner meant.

Role of Marilee Hill, Registered Representative

Since 1999, Marilee Hill has been working with clients to help them understand 1031 exchange practices and the context in which these real estate deals qualify and conclude successfully. Banking on her experience with sales and leasing, Hill helps those who want to pursue these deals to develop a better picture of how they work.

In her prior role as a broker, Hill learned a lot about what truthfulness and transparency offer in the common real estate deal – and other deals that seem rather unique! When you get involved in any complex real estate deal, you want agents and brokers who can work with people. Ask Marilee Hill for advice on 1031 exchange deals and more.

Ask Marilee Hill about what you can do with a 1031 exchange

Question 1:
Hi Marilee\nI am from San Diego My name is Chit, I am from Mira Mesa interested to sell my condo rental to an investor, using 1031 exchange, Please advise me as to your fees and send me an article that I can start with . \n\n.Maybe it will sell for $325 K , I have a existing loan of $220K. Thank you!..

Answer:
Hi - in order to facilitate one of these deals, you will need a professional qualified intermediary who does not have a conflict of interest. You'll want to go to settlement with a QI who can present papers there.

My role in the process is to help you to find replacement properties for your exchange. These properties are sold on a private placement memorandum (PPM) and regulated by Reg D of the Security Act of 1933. There are also income thresholds they can rely upon. In order to make one of these deals, you must be an accredited investor and have net worth of $1 million or more, and that does not include your primary residence.

Question 2:
we have 2 rental properties we want to sell both and buy one rental in Florida Can you help my wife and I in doing this or recommend someone in our area who can help us.

Answer:
As a registered representative with GSRE series 7, I can help you to find properties in your destination area. However, you'll need someone locally to help you sell your rental properties. You also need a qualified intermediary as mentioned above.

The Role of the QI, Part 2

The questions here were received from interested 1031 exchangers visiting my website. I have chosen to leave the questions intact with their ambiguity, shorthand writing and misspellings so as not to act on the assumption as to what when unclear the questioner meant.

The Role of the QI

It's important to have a qualified intermediary when you're trying to do any delayed exchange – if you go to settlement and don't have documentation from the QI, the deal goes through and you have you have forfeited the exchange.

So what else is disqualifying? Your qualified intermediary must be without a conflict of interest. This means avoiding using family members, as well as professionals who do other work for you such as your regular lawyer or CPA. Treas. Reg. §1.1031(k)-1(g)(4) iii specifically addresses the QI’s conflict of interest.

Question 1:
Can I complete the exchange myself without a facilitator?\nWhat is the facilitator’s fee?

Answer:
For a delayed 1031 exchange, you must always have a qualified intermediary in every case. The qualified intermediary will charge between $600 and $1000, which is small change when it comes to facilitating this type of deal. It's a good idea to have a qualified intermediary on hand and use this person as a resource going toward a successful 1031 exchange deal.

Question 2:
I am looking for someone who is familiar with 1031 delay exchange to review my exchange documents. Do you provide that kind of service?\nGee

Answer:
Unfortunately, I cannot act in the role of qualified intermediary. You must find a professional to serve as QI, and that person can't have a conflict of interest – he/she cannot be your lawyer or anyone with prior ties to you. I can help you to find replacement properties.

About Marilee: Role of Marilee Hill, Registered Representative (RR)

If you want a real estate professional with a wealth of experience to help you understand more about 1031 exchanges, Marilee Hill has a good deal of experience in this field. After running her own apartments and leasing and managing, Hill moved into a broker role.

Hill understands that a lot of the real estate process is fundamentally about people. Dealing with sponsors and customers and other agents and brokers, Hill always puts other people first. Her motto says it all: “my clients’ success is my success.”

Ask Marilee Hill about what you can do with a 1031 exchange to boost your real estate income.