Considering a 1031 exchange to defer your capital gains? You'll need a Qualified Intermediary, but finding the right one can be challenging. Here we cover what we think makes a great Qualified Intermediary, why it's important to work with an experience intermediary, and provide a list of intermediaries for each state.
A 1031 exchange, also called a like-kind exchange or a tax-deferred exchange, is a tool real estate investors can use to avoid capital gains taxes. When selling a property, the investor can work with a Qualified Intermediary to re-invest the proceeds into a replacement property, and when done successfully they can defer all capital gains taxes from the sale. One major requirement for this process is that a Qualified Intermediary must hold on to all of the funds throughout the exchange process for a 1031 exchange to qualify. Check out our comprehensive overview to learn more about how 1031 exchanges work.
Working with a Qualified Intermediary is a requirement for a successful 1031 exchange. Choosing the right intermediary is important because they will structure the exchange, draft the exchange documents, and most importantly hold your exchange funds throughout the process.
A great Qualified Intermediary can help you understand the exchange rules and guide you through the process. You can expect your intermediary to be knowledgeable about the process and be able to answer questions about your specific situation - from qualifying property to navigating holding entities to dealing with multiple owners.
When choosing a Qualified Intermediary, we also think the best ones can describe how they secure your funds. Do they have appropriate levels of insurance coverage and bonding? Do they hold your funds in segregated accounts? For very large transactions, do they have a sufficient level of FDIC coverage with their banking partner?
Finally, a great Qualified Intermediary offers fair pricing. Some exchanges are complicated, requiring many sales and purchases, requiring navigating laws from multiple states, and require collaboration with other tax attorneys and accounts. Other exchanges are fairly simple and straightforward. You wouldn't expect to pay the same amount to exchange two skyscrapers as you would buying and selling two duplexes. The right partner has the expertise to handle your transaction and charges a competitive price for the service.
There are many other intermediaries scattered across the country, some who have a local focus and others who work nationally. Below we've assembled a list of providers, and in the case where they have been Verified, we also include more details on the services they offer and their pricing. Click on the name of your state to find a local provider or review the entire list below.
6,894+ Exchanges (and counting...) — Deferred is redefining how 1031 exchanges should be. Our experienced team delivers a service level that exceeds expectations, with no fee—while earning you interest on your exchange funds.
