What is a Qualified Intermediary, and why must they be neutral?
A Qualified Intermediary (QI) is the independent company that holds your sale proceeds during a 1031 exchange and uses them to acquire your replacement property, so that you never take receipt of the cash. They must be neutral — not you, your relatives, or anyone who has recently acted as your agent — because if a party close to you controlled the funds, the IRS would treat you as having received the money and the deferral would be lost.
The neutrality requirement is what makes the safe harbor work: the money is held by someone who isn’t your agent, in a segregated escrow account, beyond your constructive receipt.
A good QI adds protections beyond the bare legal minimum — segregated accounts, insurance, and dual approval on every movement of funds. See how your money is protected and the qualified intermediary definition.
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General education — not tax or legal advice. This explains how §1031 exchanges work in general terms and uses simplified assumptions. Rules and tax rates change and your situation is specific. Talk to a qualified CPA or tax attorney before you rely on any of it. See our full terms & legal notice.