3 Important Factors While Choosing A Qualified Intermediary

Real estate has always been and continues to be a hot market. This makes today a perfect time to decide whether or not to buy or sell. However, no matter what you choose, using a 1031 like-kind exchange real estate can help you defer taxes on the sale of your property.

This post is a guide to choosing a qualified 1031 intermediary that can provide you with the following advantages.

The Work Of A Qualified Intermediary In 1031 Exchange

Using a qualified intermediary is a requirement for deferring capital gain taxes through section 1031 exchanges. For instance, at the time of the sale of real estate you want to exchange, you’re not allowed to receive the proceeds directly. The intermediary, therefore, sells the property on your behalf and gets the funds from the sale. It is such because if you receive any money from the sale directly, you’ll have to pay capital gain taxes on that amount.

 

Factors To Consider Before Selecting A 1031 QI

* The Experience

Does the QI have the necessary experience and expertise to handle 1031 real estate exchanges? Choosing a QI with the added knowledge and capability to facilitate even the most difficult exchanges is essential. Additionally, you should be able to trust your QI.

 

* Transactional Transparency

You should have access to view your exchange funds at any point in time. For many 1031 exchanges, the exchanger is unsure of where their money is being held. Though it may sound hard to believe, it happens more often than you think. Make sure you choose a QI that enables complete transparency.

 

* Security Of Funds

Your funds should be held in an FDIC-insured account for maximum security. A good QI should ensure that your funds are held at top-tier banks. While there are other questions to ask them, many would not fit nicely under the abovementioned factors.

Conclusion

It would be best to work with a qualified intermediary that you are comfortable with because this is somebody you’re trusting to be responsible for a significant amount of your money. Therefore, it makes a major financial impact on you and your business.

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