Summary
The Internal Revenue Code, Section 1031 provides for the tax- deferred exchange of property held for investment or property used in a trade or business. This results in tax on the capital gain and any accrued depreciation to be deferred into the future if the exchange is structured and executed properly.
Section 1031 requires that the exchange be handled through a third party referred to as a "qualified intermediary" (QI). It is important to understand that the QI is required to be independent of the exchanger and must not be bound by an agreement allowing the exchanger to control the exchange funds. If the exchanger can control the funds, even indirectly, the exchange may be disqualified resulting in tax becoming due.See the full content of this document
Extract
1031 Exchange: A Qualified What?
The QI must have no financial interest in the transaction. In addition, the QI cannot be under the direction of the exchanging party. Th...
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