THE ROLE OF A QUALIFIED INTERMEDIARY IN A DEFERRED Exchange

In an era of increasingly complex real estate transactions, one of the most complex, the Real Estate Exchange, has now become much simpler. The opportunity for Investors to take advantage of the tax deferral remains to be one of the largest motivations to invest in Real Estate. 

Today, there has never been a better time for a properly structured Real Estate Exchange. Because of the immense benefits of a Real Estate Exchange, all Taxpayers, Accountants, Attorneys and Real Estate Professionals must take the time to learn how this concept can benefit virtually all Real Estate Investors. 

Under the new Regulations, what were called "Delayed" Ex- changes are now termed "Deferred" Exchanges. The I.R.S. has served notice on the Tax and Real Estate community that they will be closely watching the Deferred Exchangeand are requiring that the guidelines of the new Regulations must be observed in all respects. It is imperative that Taxpayers observe the established guidelines to insure the integrity of their proposed Exchange. With the adoption of the new 

Regulations the element of certainty is finally established to allow the Taxpayer the flexibility of performing a Deferred Exchange. 

THE ROLE OF THE PROFESSIONAL QUALIFIED INTERMEDIARY: 

The Professional Qualified Intermediary is in the business of facilitating Deferred Exchanges. They protect the integrity of the form of the transaction to ensure tax deferred treatment. They protect the Taxpayer's tax treatment by compliance with any “Safe Harbors” which are incorporated and by performing as required in the ExchangeAgreement. The Regulations provide ground rules for the Professional Qualified Intermediaries performance to ensure treatment of the transaction as a Deferred Exchange. The Regulations also provide tools for the Professional Qualified Intermediary to protect the Taxpayer, to ensure performance and protect against misappropriation.

CUSTOMARY SERVICES OF A PROFESSIONAL QUALIFIED INTERMEDIARY: 

Professional Qualified Intermediaries usually seek this type of business and in turn, charge a fee for providing their services. Such customary services should include: An initial ExchangeConsultation with the Taxpayer to gather data and determine the objectives of the Taxpayer, ExchangeTransaction Analysis which is the actual structuring process of the Exchange, ExchangeConsultations with the Taxpayers Real Estate Agent, Attorney, Title Company, Accountant or any other party to the transaction, any necessary Research of the Transaction issues, preparing the Qualified Intermediary Agreement, ExchangeAgreement, Assignments, Escrow Agreement and the Administration of the Qualified Escrow Account. 

A Professional Qualified Intermediary should have special training in negotiation, contract law, taxation, investment analysis, escrow procedures and real estate practice as well as having a proven success record in the field of facilitating Real Estate Exchanges. The Professional Qualified Intermediary is a valuable resource to the Taxpayer, the Real Estate Agents, Attorneys and Accountants involved in the transaction. A properly trained Professional Qualified Intermediary will identify problems before they treaten the Exchange.  The Professional Qualified Intermediary is the Quarterback of the transaction.

The essence of the Deferred Exchange, under the new Regulations, is the ability to close the transaction in stages, which makes the Delayed Exchangea much simpler and more efficient vehicle than the so-called "Concurrent Exchange". The problems of a simultaneous closing with multiple properties in different locations can be a nightmare, at best.