Qualified Intermediary: Is intent to replace with another investment property?

Virtually any type of real property used for business use or investment will qualify, that money must be kept by the chosen qualified intermediary of the investor until it will have to be used to purchase the property to be used for replacement. Also, you need to use a qualified intermediary to file the paperwork and hold the funds for you.

To assist you in facilitating a like-kind exchange, a qualified intermediary can be used, likewise, it must be your intention as you acquire your replacement, to either hold that property for investment or use it for your organization purpose. In addition, when a buyer steps forward, and the purchase contract is executed, the seller enters into an exchange agreement with a qualified intermediary who, in turn, become the substitute seller.

Taxable Business

These are all things that a qualified intermediary can explain to you in more detail, but the more you understand before going into the process the more confident you will have to be with your planning and in the outcome, selling or exchanging business or investment property usually leads to a taxable capital gain or loss, similarly, property is like-kind to the property exchanged if it in turn is acquired with the purpose of holding it either for investment or for use in a trade or business.

Look at the business details that can creep into transactions and interfere with the initial goals of the parties, owners of business or investment property may want to sell and reinvest in a similar new property, consequently, if you transfer property through a qualified intermediary, the transfer of the property given up and receipt of like-kind property is treated as an exchange.

Certainly, the more rental, investment or business use activity the stronger your argument will have to be that you had the intent to hold for investment, qualified intermediary, which exchanged that investment for another, like-kind investment property.

Want to check how your Qualified Intermediary Processes are performing? You don’t know what you don’t know. Find out with our Qualified Intermediary Self Assessment Toolkit: