Qualified Intermediary

Definition

A qualified intermediary (QI) is an independent third party required to facilitate a 1031 exchange by holding the sale proceeds from the relinquished property and transferring them to acquire the replacement property on behalf of the taxpayer. The taxpayer cannot take constructive receipt of the funds at any point during the exchange, or the transaction loses its tax-deferred status. CPAs must coordinate closely with the QI to ensure proper documentation and timely transfer of funds within IRS deadlines.