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National Directory of 1031 Exchange Qualified Intermediaries


National Directory of 1031 Exchange Qualified Intermediaries

If your commercial property transaction can be structured as a 1031 exchange, any capital gains taxes owed can be deferred. This includes residential real estate that is a rental property. Being able to reinvest all sales proceeds greatly increases your investment opportunities. You could exchange a large commercial property for multiple rental single family homes. Replace one mature rental property with several in a high growth market. There are time limits, property selection rules, and restrictions on the handling of any cash involved that will need to be observed and documented. In order to take full advantage of the benefits of a 1031 exchange, you will need the services of a top-rated professional. Find one in the HouseCashin directory featuring local 1031 tax-deferred exchange companies — the most qualified and reputable experts in your area.

Frequently Asked Questions

There are many requirements such as specific terms and timelines to follow to keep the exchange valid and eligible for tax deferral. One of the requirements is that you cannot personally receive cash from the sale of your property for which the replacement property will be purchased. So there is a need in a qualified intermediary. 1031 tax-deferred exchange companies perform the important functions of a qualified intermediary (also called a 1031 QI). They are also experts in the many other details of performing a 1031 exchange. They will guide you through the rules and regulations, take care of any required documentation. The best companies provide investment property exchange services that go beyond explaining tax laws. They can show you how a 1031 exchange can be used with different property types such as residential land and mixed-use property. The right company will help you expand your investment strategies and perform the duties that will achieve a successful 1031 exchange.

A 1031 like-kind exchange company is concerned with a property owner’s tax liability. They make sure that the timing and property transfer details meet the requirements of the Internal Revenue Code (IRC) section 1031. A title insurance company protects the buyer and the lender from financial losses if the seller did not have undisputed ownership of the property. To do this they will examine the chain of previous ownership to make sure that the property seller can convey a clean title to the buyer.

Over time, the IRS has enlarged the definition of exchange to allow for transactions that are not simultaneous. You can sell a property now and close on the replacement property later (a delayed, or Starker exchange), or buy first and then sell the relinquished property (a reverse exchange). In order to qualify as an exchange, any cash from the sale of property has to go straight into the replacement property without going to the investor. A qualified intermediary will take ownership of the property from the seller and transfer it to the buyer, placing any cash in an escrow account. They will then use those funds to buy the replacement property and transfer the property to their client. A qualified intermediary cannot be related to the investor or any of their agents in the transaction. They cannot act as your agent in any other capacity. These duties should be handled by 1031 exchange professionals who can also act as exchange advisors. An experienced section 1031 accommodator will meet all the criteria needed for a valid 1031 exchange.

Since the seller cannot directly receive cash, a 1031 QI will have to be used if money is involved, which is usually the case. The IRS specifically says that “a qualified intermediary can facilitate the exchange using escrow accounts.” Most 1031 exchanges are either a delayed exchange (Starker exchange) or a reverse exchange. In both cases, the sale of one property and the purchase of another are done at different times so cash is involved. A qualified intermediary would have to be used. A simultaneous exchange of properties of different values where one party compensates the other with cash would also require a 1031 QI. However, if you are simultaneously exchanging property of equal value directly and no cash is involved, then you don’t need to use a qualified intermediary.

As with any real estate transaction, you may need the help of real estate professionals such as a realtor. A good local broker can help with the sale of your property and the search for a replacement property. Your real estate agent should be aware that you are using a 1031 exchange in the transaction. You will have a limited amount of time to find the replacement property and to close on the various property sales. It is important that your 1031 exchange company is advised of everything that you and your real estate team are doing throughout the transaction.

The cost charged by a 1031 exchange company will be impacted by the complexity of the transaction and the services that you need. A standard exchange, such as a delayed exchange, will cost as little as $500. If you need other services, like tax advice or investment analysis, you can pay up to $1,200. A more involved exchange, a reverse exchange, or a multiple property exchange, for example, can have rates of more than $3,000. You are allowed to pay this fee with exchange funds. Check with several reputable 1031 exchange companies and get detailed quotes for comparison.

The right 1031 exchange company can make all the difference in a successful property exchange. They will not only be your qualified intermediary, but they will also be your advisor in all aspects of the process. A good 1031 tax-deferred exchange company can impact your future investment goals with their performance today. Because the 1031 exchange industry is not regulated, it is important to talk to several companies and to have a list of questions ready when you do. Experience and integrity should be at the top of your list. How long have they been in business? How many 1031 exchanges have they done? Are they bonded? Do they have Errors and Omissions insurance? Do they offer a performance or satisfaction guarantee? What services do they offer? Will they handle all the needed documentation? Do they have tax advisors on staff? Can they give you an investment analysis? Go over your investment plans with them carefully. And, make sure that they use escrow accounts to hold the transaction funds.

If you know someone who has done a successful 1031 exchange, you can ask them for a referral. Remember, your needs may be different from theirs. You should still ask questions to make sure that you get the right company on board. An internet search will show you 1031 exchange companies to consider. You won’t have the comfort of a personal referral from someone you trust, so make sure you do your homework there as well. The best of both worlds is the directory of 1031 tax-deferred exchange companies found on HouseCashin. The 1031 exchange companies you’ll find on our list were carefully selected by us for their reliability, their experience, and their integrity. HouseCashin is the resource you need to find the top-rated 1031 exchange companies in your location that will help you make the right investment property decision.

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