How to Choose a Qualified Intermediary for Your 1031 Exchange

A 1031 exchange has one non-negotiable requirement: a Qualified Intermediary, or QI, must hold your sale proceeds between the sale and the purchase. You cannot touch the money yourself. Choosing the right QI matters more than most investors realize, because the industry is not federally regulated and your funds are at stake.

What a QI actually does

When you sell, the proceeds go directly to the QI, not to you. The QI holds the money, then uses it to acquire your replacement property. If you take possession of the funds at any point, even for a day, the exchange is disqualified and the entire gain becomes taxable.

Why the choice matters

Because there is no federal licensing for QIs, anyone can call themselves one, and there have been cases of QIs going bankrupt or misusing client funds. Your proceeds can be a large sum sitting with the QI for up to 180 days, so fund security is the first thing to evaluate.

What to look for

Where to find one

Our Qualified Intermediary directory lists national QIs and breaks down how to compare them, with a state-by-state view of the tax context. You can also verify a firm in the Federation of Exchange Accommodators member directory.

Bottom line

Estimate your exchange first with the 1031 calculator, then line up a QI with strong fund security well before you close, because you need one in place before the sale.