If I sell a house and buy another one with cash, can I do the 1031 tax exchange paperwork and the income tax paperwork myself legally, or am I forced by law to use an intermediary?
2007-06-30 15:50:52 · 2 answers · asked by hiker 2 in Business & Finance ➔ Taxes ➔ United States
you are forced by law to use an intermediary? The Qualified Intermediary (aka QI or Accommodator) is essential to completing a successful and valid 1031 exchange. It is the independent party that holds the funds between the sale and future purchase. A Qualified Intermediary should be bonded and insured against errors and omissions and employee dishonesty. Relevant educational background such as tax, law, or finance is desired. The operative words there are "should be" and "desired". Nevada is the only state that requires a Qualified Intermediary to be licensed. There is currently no protection available through government insurance.
Although not guaranteed, NetGain believes there is less probability of loss if the funds for a 1031 exchange are placed with a Qualified Intermediary that is monetarily controlled by and responsible to a financially strong, regulated company (i.e., bank, insurance company, etc.).
2007-06-30 16:17:14 · answer #1 · answered by zia20002 1 · 0⤊ 0⤋
If you just sell one property and then buy another with cash, that's NOT a 1031 exchange and you don't get any deferral of the capital gains on the sale.
2007-07-01 05:28:48 · answer #2 · answered by Bostonian In MO 7 · 0⤊ 0⤋