Why you can't touch the cash
To defer tax in a 1031, you can't take "constructive receipt" of the sale proceeds. A qualified intermediary (QI) holds the funds between the sale and the purchase.
What the QI does
The QI prepares the exchange documents, holds the proceeds in a separate account, and disburses them to buy the replacement property — keeping the exchange compliant.
Choose carefully
QIs aren't federally licensed, so vet for bonding, segregated accounts, and track record. Your funds sit with them during the exchange window.
Frequently asked questions
Do I need a qualified intermediary for a 1031?
Yes. You cannot receive the sale proceeds directly; a QI must hold them.
Is a QI regulated?
Not federally licensed in most states — vet for bonding, insurance, and segregated accounts.
Sources
Educational information and estimates only. Not tax advice. Tax rules change and vary by situation; consult a qualified tax professional before acting.