When do I need to hire the qualified intermediary?

Before your sale closes, this is absolute. The QI must be contractually assigned into the transaction and receive the proceeds directly at closing. If the closing agent hands you the money first, even for a day, the IRS treats it as a completed taxable sale and no QI can fix it afterward. Most investors engage the QI as soon as the relinquished property goes under contract.

Can my CPA or attorney act as my qualified intermediary?

No. IRS regulations disqualify anyone who has been your employee, attorney, accountant, investment banker, or real estate agent within the two years before the exchange, they are considered your agents, and an agent holding funds is the same as you holding them. You need an independent professional QI firm, ideally one that is bonded, insured, and holds funds in segregated accounts.

Real Estate Investing Glossary

Qualified Intermediary (QI)

Last reviewed 2026-07-15

A qualified intermediary is the independent third party that holds 1031 exchange proceeds and papers the swap; investors may never touch the funds.

What is a qualified intermediary?

A qualified intermediary (QI), also called an exchange accommodator or facilitator, is the independent third party that makes a delayed 1031 exchange legally possible. The IRS treats sale proceeds you receive, even for a moment, as a taxable sale. The QI solves this by contractually stepping into the transaction: it receives the funds from your sale, holds them in escrow, and wires them directly into the purchase of your replacement property.

The QI also handles the required paperwork: the exchange agreement, assignments of both purchase contracts, the written 45-day identification, and coordination with both closing agents. "Qualified" means independent, your attorney, CPA, real estate agent, or anyone who has acted as your agent within two years is disqualified from serving.

Choosing carefully matters because the QI industry is lightly regulated in most states and the QI holds your entire proceeds for up to 180 days. Look for fidelity bonding and errors-and-omissions insurance, segregated (ideally dual-signature) escrow accounts rather than commingled funds, an established track record, and membership in the Federation of Exchange Accommodators. Fees for a standard delayed exchange typically run $750 to $1,500 plus modest per-property charges.

Frequently asked questions

When do I need to hire the qualified intermediary?: Before your sale closes, this is absolute. The QI must be contractually assigned into the transaction and receive the proceeds directly at closing. If the closing agent hands you the money first, even for a day, the IRS treats it as a completed taxable sale and no QI can fix it afterward. Most investors engage the QI as soon as the relinquished property goes under contract.
Can my CPA or attorney act as my qualified intermediary?: No. IRS regulations disqualify anyone who has been your employee, attorney, accountant, investment banker, or real estate agent within the two years before the exchange, they are considered your agents, and an agent holding funds is the same as you holding them. You need an independent professional QI firm, ideally one that is bonded, insured, and holds funds in segregated accounts.

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