1031.Exchange INTELLIGENCE NETWORK
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EXCHANGE MECHANICS

Exchange agreement

Also called: QI agreement · 1031 exchange agreement

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PLAIN-ENGLISH DEFINITION

The written agreement between the taxpayer and qualified intermediary that governs the intermediary’s role and exchange mechanics.

What it means in practice.

The qualified-intermediary safe harbor contemplates a written agreement under which the QI acquires and transfers the relevant properties and restricts the taxpayer’s rights to the proceeds.

Why it matters.

It should be in place before the relinquished-property closing in a conventional deferred exchange.

Additional notes.

The qualified-intermediary safe harbor contemplates a written agreement under which the QI acquires and transfers the relevant properties and restricts the taxpayer’s rights to the proceeds.

PRIMARY / REFERENCE SOURCES

Read the source material.

irs.gov ↗irs.gov/publications/p544
CONNECTED LANGUAGE

Related definitions.

Core 1031Qualified intermediaryA commonly used independent facilitator that enters into an exchange agreement and helps structure transfers so the taxpayer does not simply receive the exchange proceeds.Exchange MechanicsAssignmentThe transfer of contractual rights or obligations from one party to another.Exchange MechanicsDirect deedingA common exchange-closing technique where title passes directly between the underlying parties even though the QI is treated as acquiring and transferring property for exchange purposes under the safe harbor.
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