What is a Qualified Intermediary (QI)?

This qualified intermediary (QI) is allowed to sell the taxpayer’s property, collect the funds from that sale, and then use those funds to acquire a replacement property for the taxpayer. The rules governing IRC section 1031 like-kind exchanges are complex and carry inherent risks.

Do I need a Qualified Intermediary for a 1031 exchange?

As you can see, using a Qualified Intermediary is not only required to complete a successful 1031 exchange, but they can also be an extremely helpful resource to help you avoid the many risks associated with like-kind exchanges. This is why it’s so important to find a really experienced QI. Who Can be a Qualified Intermediary For a 1031 Exchange?

What happens if you don't use a Qualified Intermediary?

Instead, the funds are held by a QI that facilitates the exchange in order to protect tax deferral benefits and finalize the process. If an investor does not utilize a Qualified Intermediary, or has possession of the funds from the sale at any time, they’ll be disqualified from doing a 1031 exchange, and any profits will be taxed as capital gains.