The I.R.S. Regulations have
defined several “safe harbors” as
tools for structuring your exchange. These “safe
harbors” help establish the boundaries for
safe exchanges. As long as your transaction is
structured within these boundaries, it is generally
presumed that your exchange will be allowed.
Using a Qualified Intermediary (QI) to hold the
proceeds of your sale is one of these “safe
harbors”. You cannot have actual or constructive
control of any of the proceeds received from the
sale of your property, nor can you leave them
in an escrow account. As long as you have a QI
hold the proceeds from your sale, you have complied
with that requirement.
The QI cannot be your attorney, accountant, real
estate agent or a related party. To meet the
requirements of Section 1031, the proceeds from
the sale of your property are delivered directly
to the QI. When you are ready to close on your
replacement property, the QI then transfers these
proceeds to the seller.
A successful Section 1031 exchange relies upon
the proper completion of documents, a timeline
strictly followed, and a taxpayer who has been
informed of all the options available for his
particular situation. The selection of an experienced
QI can reduce the stress associated with an exchange,
can streamline the process and can assure the
success of your exchange |
|
