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.

Timing, Part 5
Exchange Basics, Part 8 

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