A 1031 intermediary is engaged to accommodate a 1031 tax deferred exchange for taxpayers of all means when selling and replacing real and personal property. Also known as a qualified intermediary or exchange facilitator, the 1031 intermediary is one of four safe harbors the Internal Revenue Service instituted in 1991 whose outcome determines whether the taxpayer is in constructive receipt of money or other property for purposes of the Internal Revenue Code (IRC) Section 1031. The use of one or multiple safe harbors satisfies the g(6) limitations of the Code that the taxpayer is not to “actually or constructively receive exchange funds or to have an agency relationship with an exchange facilitator solely for purposes of IRC Section 1031.”
1031 exchange intermediary
1031 Exchange Qualified Intermediary
In the United States, when you sell an asset for more that what you paid for the asset, the profit is often subject to the payment of capital gains taxes. The rate at which capital gains are taxed fluctuates, but is generally high. As a result, the actual profit realized from the sale of an asset can be significantly reduced. If the transaction qualifies for an Internal Revenue Code Section 1031 Exchange, however, the payment of any required capital gains taxes can be deferred, making a 1031 Exchange an attractive option. There are a number of rules that must be followed in order for a transaction to qualify for a 1031 Exchange deferral, including the use of a 1031 Exchange Qualified Intermediary.