The Role of the Qualified Intermediary (QI)

1031Exchange, Marilee Hill

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 Qualified Intermediary (QI)

You must have a Qualified Intermediary (also referred to as an Accommodator) for a delayed exchange, and without the QI’s papers at settlement, you “flunk” the test and forfeit the opportunity to do an exchange. As to whom the investor may hire, this is dictated by a list of people with whom the investor may not engage, such as his brother, lawyer, CPA, etc. – be sure to hire someone who is both qualified and free of conflicts of interest. The role of a QI is defined in Treas. Reg. §1.1031(k)-1(g)(4).

Question 1:
needing to do a simultaneous like kind exchange on rental property selling at 380,000 for purchase of another rental 250,000. Do I need a QI? and if yes why? Do I need a QI?


I do not know. When using the word “simultaneous,” the next thought is how adventuresome closings can be, and how closing details, through errors and surprises, create uncertainty. You could even have the person who records the two deeds record them in the wrong order! For the cost of anywhere from $600 – $1,000, I recommend removing the potential “slip between the cup and the lip,” and engaging a Qualified Intermediary.

Question 2:
Do we need to have an QI always ? what are the paper work i am suppose to keep just in case the IRS comes back with an Audit. Do we prapare the return and send it waiting for an approval from the IRS on the acceptance on the 1031 exchange.

You ALWAYS have to have a QI with a delayed exchange – Before you go to settlement, the QI’s papers must be at settlement. If they aren’t, and you proceed, you will have constructive receipt of your funds and cannot do a 1031 exchange. The QI provides you with the required paperwork and sends it to settlement. At tax time, your accountant will fill out IRS Form 8824. The IRS does not “accept” the exchange; if they choose to audit the exchange, the IRS can disqualify the exchange and you pay all the required taxes.

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

When Marilee entered into the securitized 1031 exchange arena she already had experience in land sales, office and retail sales and leasing, and knew her way around FINRA and the GSRE.

Hill’s experience managing her own apartment buildings helped her to understand the “nuts and bolts” side of property management, and the people side of real estate. She has had real estate broker licenses in three jurisdictions, which showed her many of the ins and outs of real etstate processes and how they might vary from deal to deal. Through her long career in real estate, Marilee has gotten to know many sponsors and their histories; the sponsors respect her knowledge and appreciate her truthfulness. With the motto: “My clients success is my success,” Hill provides qualified and truthful real estate assistance to clients.

Talk to Marilee Hill about your next 1031 exchange deal.

1031 Exchange