Who Is A Qualified Intermediary That Can Arrange A 1031 Like-kind Exchange?
by Jeff Heimler, CPA Who exactly is a qualified intermediary that can arrange a 1031 like-kind exchange? Does that person have to be a lawyer, CPA, an escrow company representative, or a real estate broker? A 1031 exchange, or like-kind exchange, is normally done when a taxpayer does not want to recognize gain on the exchange of property. This is accomplished by essentially trading one property for another. But there are very specific rules regarding these exchanges. Disregarding these rules will invalidate the tax-free exchange and make it taxable. To avoid the IRS treating you as actually having received money or non-like-kind property in the transaction, you need a qualified intermediary. The qualified intermediary will receive the cash from the sale of the first property and use it to purchase the second property. The Internal Revenue Service regulations stipulate that a qualified intermediary cannot be an agent of the taxpayer such as an employee, accountant, attorney, broker or realtor, or other related parties. Most realtors or title companies will be able to refer you to an appropriate intermediary, however. There are some companies that specialize in just being a qualified intermediary. Like-kind exchanges are very complex and tricky transactions. You should consult a qualified professional before entering into this type of transaction so that it goes according to plan. Jeff Heimler is principal of Heimler & Associates, CPA. He can be reached at (949) 252-8192. Have a question for a CPA? Ask it here.
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