Is it possible to change my qualified intermediary (QI) after the 1031 exchange has been initiated, and funds have been transferred to the QI?
Err on the Side of Safety
To be on the safe-side, if you have already initiated your 1031 exchange and transferred funds, you should stick with the qualified intermediary that you started with.
According to § 1.1031(k)-1(g)(4) (iii), a qualified intermediary is a person who:
- Is not the taxpayer or a disqualified person (as defined in paragraph (k) of this section), and
- Enters into a written agreement with the taxpayer (the “exchange agreement”) and, as required by the exchange agreement, acquires the relinquished property from the taxpayer, transfers the relinquished property, acquires the replacement property, and transfers the replacement property to the taxpayer.
QI Requirements for a 1031 Exchange
As per this regulation, the qualified intermediary must have entered into an exchange agreement and been a conduit on both the Relinquished Property and Replacement Property. Once the qualified intermediary has facilitated the exchange out of the Relinquished Property, then they are the only party that can satisfy the rule and fulfill the function of qualified intermediary.
Commercial Partners Exchange Company
If you’re considering a 1031 exchange of real estate, it’s important to have a qualified intermediary by your side that can guide you through the process. At Commercial Partners Exchange Company, we have been facilitating 1031 exchanges for over two decades. We have the skills and experience to help ensure your exchange is a success. Contact us today at our downtown Minneapolis office to learn more about the services we provide and get started with your 1031 exchange!