What Does a Qualified Intermediary Do?


A qualified intermediary is the party who holds the proceeds from the sale transaction until the taxpayer is ready to buy the replacement property.
Under the IRS Safe Harbor rules for 1031 exchange; if the taxpayer gets constructive use of the proceeds at any time during the exchange, the whole thing is tainted and it won’t work.
So it’s very important to pick a qualified intermediary who’s reliable, who will hold the proceeds from the sale until the time of the purchase.