Qualified Intermediary

Definition

A neutral third party handling funds in a 1031 exchange to maintain tax-deferred status—because the IRS trusts no one.

Example Usage

The qualified intermediary received the sale proceeds and held them until the replacement property purchase closed.

Origin

IRS regulation requirement established in Treasury Regulations Section 1.1031(k)-1

Fun Fact

If you touch the money yourself during a 1031 exchange, the entire tax deferral evaporates—the IRS doesn't forgive careless mistakes.

Source: Internal Revenue Service (IRS) Standards

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