A qualified intermediary is a common player in most 1031 exchanges, but some people don’t understand the benefits of hiring an intermediary. That’s what we’ll discuss here. If you’re considering a 1031 exchange in St. Cloud or the surrounding area, give our qualified intermediaries a call today to talk about your options – 612.643.1031.
Why Hire a Qualified Intermediary for your 1031 Exchange?
Some people may wonder whether or not they even need a qualified intermediary for their 1031 exchange. In some situations, like a simultaneous “drop and swap” exchange, an intermediary isn’t necessary. But most 1031 exchanges don’t happen this way. Typically the selling of the relinquished property and the purchasing of the replacement property do not happen simultaneously. In these situations, it is essential to have a qualified intermediary on your team.
Most like-kind exchanges begin with the sale of a relinquished property. At the close of that sale, the taxpayer would normally receive the net proceeds. However, if the taxpayer actually receives these gains, they are going to have to pay taxes on them. For a 1031 exchange to work, you need to keep these funds segregated and move them over into your new replacement property during that closing. You want to keep those 1031 exchange funds separated from your bank account in order to insulate you from recognizing any of the gain. This is where an intermediary can be most helpful in holding these sales proceeds for you in a separate, segregated bank account, while your exchange period moves forward.
In addition to acting as the exchange facilitator, your qualified intermediary can also be extremely helpful in preparing documents, advising you on identifying and purchasing property, and making sure you satisfy all of your requirements.
Contact a St. Cloud Qualified Intermediary
1031 exchanges offer extremely beneficial tax savings, but you have to make sure that you’re following all of the rules and requirements set out in the internal revenue code. This is where a qualified intermediary can lend the most help. Experienced intermediaries know the IRC inside and out, and can help you through all of the aspects of your 1031 exchange. Contact our St. Cloud qualified intermediaries today to get started with your 1031 exchange – 612.643.1031.