How To Select An Intermediary
The Intermediary should be carefully chosen to ensure the exchange is defensible. As a principal in the transaction, the Intermediary will have as much responsibility as the Exchangor for performance of contractual obligations in the selling and buying of property. The real estate agent for the Exchangor will become the real estate agent for the Intermediary and, if the agent is unfamiliar with exchanging, it may be the Intermediary's responsibility to ensure that the transaction is conducted properly.
The use of a Qualified Intermediary is a valuable resource for real estate professionals to safely expand their use of exchanging and for investors who want to obtain the highest level of flexibility for the creation of future wealth. An Intermediary with experience in negotiation, contract law, taxation, investment analysis, closing and real estate practice is extremely valuable should problems arise. Exchange problems frequently require knowledge of
all of these areas in order to arrive at a solution. The Intermediary should also have the finest legal and tax counsel available to assist when a problem requires specialized knowledge. A properly trained Intermediary will identify the problems before they threaten an exchange.
It is important to note the tax return that held the original property must be the same tax return on the new property. The title holder(s) must be the same.
The purchased property or properties must be equal to or greater than the value of the relinquished property. All cash profits must be reinvested to defer tax. If any cash is taken, called "boot", it is considered a taxable event.
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