An accommodator in a 1031 exchange, also known as a “qualified intermediary” or “QI,” is a third-party entity that facilitates a 1031 exchange by holding the proceeds from the sale of the relinquished property and then using those proceeds to purchase the replacement property. The accommodator serves as a neutral party and is responsible for ensuring that the exchange complies with IRS rules and regulations.
Key-Takeaway
- An accommodator is a third-party entity that facilitates a 1031 exchange by holding the proceeds from the sale of the relinquished property and then using those proceeds to purchase the replacement property.
- An accommodator is responsible for ensuring that the exchange complies with IRS rules and regulations.
Example
Let’s say an investor wants to sell a rental property for $500,000 and use the proceeds to purchase a new rental property for $800,000. The investor would work with an accommodator to set up the 1031 exchange. The accommodator would hold the proceeds from the sale of the first property and use those funds to purchase the new property.
Tips
- Find a reputable and experienced accommodator, who can guide you through the process and ensure that your exchange complies with IRS rules and regulations.
- Make sure to understand the fees associated with using an accommodator, as these can vary depending on the services provided.
Advice
- Don’t try to handle a 1031 exchange without the help of a qualified intermediary as it can be complex and mistakes can be costly.
- Start looking for an accommodator as soon as you decide to pursue a 1031 exchange, as this will give you more time to find a reputable and experienced intermediary.
Recommendations
- Research different accommodators and compare their fees and services before making a decision.
- Make sure to ask for references and check their track record before working with an accommodator.
- Understand the role and responsibilities of the accommodator, and ensure that you are comfortable with the level of service and communication provided by the accommodator.