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Q. What is a Qualified Intermediary?

A. A Qualified Intermediary [QI] facilitates exchanges by intermediating between the principals. This position can also be referred to as Accommodator or Facilitator. The QI must make sure the exchange follows all the rules and requirements.

Q. What are the responsibilities of a Qualified Intermediary?

A. A Qualified Intermediary [QI] must have:

  • A thorough knowledge of the 1031 rules, process and regulations
  • The ability to provide the documentation in compliance with the regulations
  • The ability to perform in compliance with exchange agreement and regulations.
Q. What documentation is involved a 1031 Exchange?

A. The Exchange Authority follows a defined, documented process that features:

  • Creation of all required exchange documents.
  • Coordination of the exchange process, including interfacing with all principals, agents and attorneys.
  • Delivery of a full report of your exchange for your records. This report is a valuable resource for the exchanger to review with their tax professional.
  • Creation of the secure account within a banking institution.
Q. Can I get a sample report of a 1031 Exchange?

A. Yes. Upon request, we can send you a sample report that contains accounting and analysis of a completed exchange transaction. This report will feature:

  • The exchange recapitulation
  • Analysis of net non-like kind property received
  • Recognized gain and exchange basis
  • A substitute Form 8824
Q. Is Exchange Authority secure and insured?

A. Exchange Authority takes pride in making sure clients feels comfortable and safe during their exchange. We are 100% insured for all 1031 tax deferred exchanges. When your exchange funds are sent to us, they are placed in a secure account and not moved until authorized for the purpose of the closing.

Q. Please define “Like-Kind”.

A. Any two assets or properties that are considered to be the same type. When properties are the same type, making an exchange between them can be tax-deferred! To qualify as like-kind, two assets must be of the same type (e.g. two Dunkin Donuts Franchises), but do not have to be of the same quality.

Q. Please explain “Reverse Exchange”.

A. A type of property exchange where the replacement property is acquired first, and then the current property is traded away. A 1031 Reverse Exchange enables the taxpayer to acquire the replacement property before selling the old or relinquished property.

Q. What exactly is “Boot”?

A. The term “Boot” is commonly used when discussing the tax consequences of a 1031 Exchange. Boot may be excess funds or going down in value creating a taxable event commonly known as “taxable boot.” This is money or other Non Like-Kind property paid to the taxpayer in an exchange. Again, boot is taxable!

Q. What is Form 8824?

A. Exchanges are reported on Taxpayer Form 8824. This form lists the following:

  • realized gain
  • recognized gain
  • new basis
  • date replacement property is identified.
  • date the replacement property was acquired
Q. What does CES strand for?

A. It stands for Certified Exchange Specialist. This is a designation available through the Federation of Exchange Accommodators. To obtain a CES, exchange professionals with at least 3 years of exchange experience must pass a comprehensive exam to measure their knowledge on exchange transactions. To maintain a CES designation, one must take continuing education courses to renew their certification every 2 years.

Q. How can I get started in a 1031 Exchange?

A.  Give us a call. During your conversation with a 1031 Exchange Specialist, we’ll want to learn about the property being relinquished and any proposed replacement property. At Exchange Authority, we take a detailed approach and seek to understand your objectives. During our conversation we’ll seek to learn as much as we can about your exchange opportunity so that we can structure the most favorable, tax-deferred outcome.

Q. What are the services of a QI?

A. Provides secure escrow services for the exchange process.

1031 Exchange Synonyms

1031 Exchanges are referred to in a variety of ways. The most common terms you will hear are:

  • Authority IRC 1031
  • Method to Defer Tax on Profit [Gain]
  • Tax Deferred Exchange
  • Interest Free Government Loan

Contact the Exchange Authority Today

Our qualified intermediaries will answer your questions and ensure that your transaction meets all the requirements for a successful exchange.

CALL (978) 433-6061