Skip to content

1031 Basics

Why Your Qualified Intermediary Should Be Involved Before Closing

The most expensive mistake in an exchange is a timing mistake, and it usually happens in escrow.

The exchange documents generally have to be in place before the relinquished property transfers. If the proceeds reach you — even briefly, even into your own escrow instructions — the exchange is typically destroyed.

A qualified intermediary is an independent party who holds the exchange funds and documents the transaction. Jacob is not a qualified intermediary and never holds exchange funds. His role is to make sure the QI is engaged early enough to matter.

Engaging the QI early also improves the quality of the decision, not just the mechanics. A good intermediary will raise questions about title and entity structure, identification strategy, debt replacement and multiple-property timing while you can still act on the answers.

If you take one thing from this library: call the QI before the property is listed, not when escrow is closing.

Important: These calculations are for general educational and planning purposes only. They aren't an appraisal, tax calculation, legal opinion, investment recommendation or guarantee of results. Tax basis, depreciation, exchange eligibility and tax consequences can vary substantially based on individual facts. Review your specific situation with your CPA, attorney, qualified intermediary and other appropriate professionals before acting.

Questions about how this applies to your property?