Qualified Intermediary Services for Delayed 1031 Exchanges
Arrange the exchange before your investment-property sale closes. Independent Exchange Services, Inc. prepares exchange documentation and coordinates proceeds and replacement-property steps with your escrow and advisory team.
What IES handles for your exchange
Independent Qualified Intermediary services since 1980.
IES prepares the Exchange Agreement and assignment documents, reviews the estimated settlement statement for the exchange, and coordinates proceeds with escrow. At the replacement-property stage, IES coordinates exchange documents and releases funds under the agreement and closing instructions.
The exchange work connects your sale, replacement purchase, and advisory team. See our team's experience and the information that helps brokers, CPAs, and escrow coordinate with us.
IES acts as a third-party Qualified Intermediary. As principal in the transaction, IES acquires the Phase I relinquished property from the Exchanger, transfers the property to the buyer, receives exchange equity at close of escrow, and issues an Exchange Credit. Upon purchase of the Phase II replacement property, IES provides cash to acquire the Phase II property and transfers it to the Exchanger.
When to involve a Qualified Intermediary
IES should be involved before the relinquished property closes and before the taxpayer receives sale proceeds. Early review allows the exchange agreement, assignment documents, settlement statement, wiring instructions, replacement property identification process, and 45-day and 180-day timing rules to be coordinated with the client's CPA, attorney, broker, lender, and escrow officer.
IES Process
A compact view of the transaction path.
Phase 1: Relinquished property agreement and assignment
As soon as a real estate contract and preliminary title report are prepared, IES needs those initial documents to start the exchange. IES also collects contact information for brokers, title and escrow officers, CPAs, attorneys, and the client, then prepares the Exchange Agreement and Assignment of Real Estate.
Phase 1: Estimated settlement statement
When the relinquished property transaction is ready to close, IES reviews the estimated settlement statement so it is structured properly for the exchange. Upon close of escrow, funds are wired to IES and a statement of exchange credit balance is provided.
Phase 2: Replacement property identification and closing
IES tracks exchange timing, coordinates replacement-property documentation, and releases funds according to the exchange agreement and escrow instructions. The ordinary identification period is 45 days; receipt is due by the earlier of day 180 or the applicable tax-return due date, including extensions. Confirm any special relief with your advisors. Review the identification guide and closing-period guide, or use the planning-date calculator.
Advisor and escrow coordination
IES works with the client's tax, legal, brokerage, lending, title, and escrow teams to keep transaction documents consistent with the exchange structure. This coordination is especially important when ownership entities, multiple replacement properties, boot concerns, or tight closing dates are involved.
Terminology
Common terms clients encounter during an IES transaction.
- Deferred gainAmount of realized gain that is not currently taxable.
- Qualified IntermediaryA third party facilitator and independent principal who assists in completing a successful Section 1031 tax deferred exchange.
- Relinquished PropertyThe property the Exchanger is selling. Also called the old property.
- Replacement PropertyThe property the Exchanger is buying. Also called the new property.
- Section 1031Internal Revenue Code provision that can defer gain when qualifying property is exchanged for like-kind property.
Transaction Expertise
- Delayed Exchanges
- Simultaneous Exchanges
- Reverse exchanges with RES
- Improvement-exchange coordination
- Transactions involving property outside the United States require separate review.
IES works with property owners and their transaction teams before sale proceeds are received. Real property inside and outside the United States is not like-kind to each other; see the IRS guidance on like-kind property.
IES FAQ
Questions to raise before the transaction reaches closing pressure.
When should we contact IES to start our 1031 real estate transaction?
Contact IES as early as possible, ideally when the real estate contract and preliminary title report are available and before the relinquished property closes.
What is a 1031 exchange?
A 1031 exchange allows qualifying gain from the sale of investment or business property to be deferred when the property is exchanged for qualifying like-kind replacement property.
What types of real estate qualify?
Real estate held for investment or productive use in a trade or business is the core category. Personal-use property and some vacation home situations require careful tax review.
Can proceeds be held in escrow?
Exchange funds should be handled through the exchange structure and Qualified Intermediary controls. The details should be coordinated before closing.
What information helps IES review a new exchange?
Helpful starting information includes the relinquished property address, sale contract status, expected closing date, preliminary title report, escrow officer contact, replacement property plans, ownership entity, advisors involved, and any urgent financing or timing constraints.
What if replacement property has not been chosen yet?
That is common in delayed exchanges. The exchange can still be opened before the relinquished property closes, and the identification process can be tracked during the 45-day identification period. Investors should coordinate the tax and legal details with their own advisors.
Compare the exchange paths
Review the 1031 exchange service overview if you are comparing a delayed exchange with a reverse or improvement exchange.