Hi, yes one of the basic requirements of dong a 1035 exchange (where the basis of the original property essentially follows you into the new property) is that you use a qualified intermediary
FIist, the property has to be investment roperty
Second, you have 45 days from the closing of your sale to list the properties you may want to buy. There are no exceptions to the deadline
Trird, there's a 180 Day Exchange Period. From the sale closing date, you have 180 days to close on the purchase of one or more properties from the 45-day list. Again, there are no exceptions to this deadline.
(Rule number 4 answers your question): The IRS mandates that you use a (Qualified Intermediary) QI to prepare the legal documents for your exchange. Because the QI must be independent, it cannot be your friend, employee, broker, or even your accountant or attorney. The QI also holds your money, so that you do not have access to it.
Next to last rule ( Number five): You must purchase and take title to your new property exactly as you held title to your old property. (can't move from individual to joint tenancy, for example)
And last (rule six): is called the reinvestment requirement: To defer all of your capital gain tax, you must buy a property equal or higher in value than the one you sold. Also, you must reinvest all of the cash proceeds from your sale.
Finally, here's the IRS guidance on this: http://www.irs.gov/uac/Like-Kind-Exchanges-Under-IRC-Code-Section-1031
I see you're typing... I'll wait :)
I still don't see you coming into the chat session, so I'll move us to the "Q&A" mode. … Maybe that will help … (We can still continue a dialogue there, just not in real-time chat, as we can here)
Thank you. What are the rules on QI? Meaning is it difficult to qualify? I have an unrelated company that can help me with that, if it not too difficult to qualify as QI
Sure let me get that for you
A “Qualified Intermediary” (QI) is an eligible person that enters into a QI Agreement with the IRS pursuant to Rev. Proc. 2000-12, 2000-4 I.R.B. 387, and that acts as a QI under such Agreement. Generally, under the QI Agreement, the QI agrees to assume certain documentation and withholding responsibilities in exchange for simplified information reporting for its foreign account holders and the ability not to disclose proprietary account holder information to a withholding agent that may be a competitor.
he following entities may enter into a QI Agreement:
Here's everything you (THEY) will need: http://www.irs.gov/Businesses/International-Businesses/Qualified-Intermediary-Frequently-Asked-Questions#1
I don't understand, why does this entity have to be foreign? Are you sure we are talking about the same QI here?
Doesn't have to be... they are just making the pint that foreign entities have FURTHER qualifications
US intermediaries come under number 4
If you just GOOGLE "List for Qualified Intermediaries" you see a huge number of them
There guys, for example, do a LOT of it: http://www.expert1031.com/1031experts/index.html
YW, good luck with it
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