The Role of 1031 CORP.
1031 Qualified Intermediary
A Qualified Intermediary (QI), such as 1031 CORP., acts as the facilitator or middleman in an exchange. The word “qualified” refers to the intermediary’s relationship to the Taxpayer. To be a “qualified” intermediary, the party must not be the actual Taxpayer or the Taxpayer's accountant, attorney, real estate professional, financial planner, employees, partners or close relative.
- The QI handles all required documentation, coordinates the details with you and your agents (real estate professional, tax and/or legal advisor(s) and closing agents) and holds the exchange proceeds during the exchange period.
- Both the relinquished property and the replacement property “flow” through the QI although title passes directly from the Seller to the Buyer, just as in any typical real estate transaction.
- The QI keeps you aware of your timelines and is available to answer your questions throughout the exchange process.
When must the 1031 exchange be initiated?
Ideally, the Taxpayer will notify 1031 CORP. one to two weeks prior to the scheduled closing of the relinquished property. This allows your Exchange Officer to prepare and forward the exchange documents to you with sufficient time to review and return them. It also enables your Exchange Officer to give the closing agent ample notice that the transaction is part of a 1031 exchange. If the exchange was not planned in advance, we can initiate an exchange at the last minute, even while you are sitting at the closing table. However, once the closing is complete and title of the relinquished property is conveyed to the buyer, it is too late to initiate the exchange and the sale will be a taxable event.
Exchange Accommodation Titleholder
An Exchange Accommodation Titleholder (EAT) is used to complete a reverse exchange or improvement exchange. In a reverse exchange, the EAT holds legal title to either the relinquished or replacement property until the relinquished property can be conveyed to a buyer. In an improvement exchange, the EAT holds legal title to the replacement property and makes the identified improvements before conveying the improved property to the Exchanger within the 180-day exchange period.
When must a reverse or improvement exchange be initiated?
A reverse or improvement exchange takes longer to properly structure so much time is needed. Please contact 1031 CORP. as early in the process as possible.
1031 CORP. is covered under a multi-million dollar Errors and Omissions Policy to protect you in the unlikely event we made a mistake that created a taxable event for you. For a copy of our Evidence of Insurance, simply ask your Exchange Officer.