When engaging in a 1031 exchange, it’s always a good idea to work with a qualified intermediary. However, not just anyone can act as your qualified intermediary. In fact, some people are outright disbarred from acting as your qualified intermediary. In this article, we are going to talk about why your relative cannot act as qualified intermediary on your 1031 exchange of real estate.
The Related Party Exclusion Rule
In any 1031 exchange of investment real estate, there are certain parties that the IRS says cannot act as your qualified intermediary. Some of those excluded parties are:
Related Parties – anyone related to you by family or blood.
Business Agents – anyone directly affiliated with your business affairs (CPA, accountant, attorney, etc.)
Your employees
Your Realtor
Any party who falls into one of the above categories over the previous two years cannot act as your intermediary.
Find a Qualified Intermediary for Your Exchange
If you can’t work with any related parties, who should you work with on your 1031 exchange? Your qualified intermediary should be an independent third-party who has no previous association with you. It’s best to work with a qualified intermediary who focuses their business solely on facilitating 1031 exchanges.
Contact a 1031 Exchange Intermediary
At CPEC1031, LLC our qualified intermediaries have been helping taxpayers with their 1031 exchanges of investment real estate for more than twenty years. 1031 exchanges are all we do. Contact us today to learn more about the 1031 exchange process and how we can help facilitate your 1031 exchange by acting as qualified intermediary. You can find us at our main office located in downtown Minneapolis.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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