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What does a 1031 exchange qualified intermediary do?
A 1031 exchange qualified intermediary is the independent company that holds the proceeds from the sale of your investment property and uses them to buy the replacement, so you never touch the money. If you receive the funds, even for a day, the exchange can fail and the gain becomes taxable. Florida does not license or regulate intermediaries, so choosing one is one of the most important decisions in the exchange, and it should happen before you sign the sale contract.
By Erika Schell, P.A. | October 2026
Key takeaways
- A 1031 exchange qualified intermediary must be independent: your attorney, accountant, real estate agent or employee within the past two years cannot serve.
- Florida does not license intermediaries, so ask about segregated accounts, fidelity bond and errors and omissions coverage before you sign.
- The clock is strict: 45 days to identify replacement property and 180 days to close, counted from the sale of the property you relinquish.
Why the intermediary matters
Under Treasury Regulation §1.1031(k)-1, a qualified intermediary enters into a written exchange agreement with you, receives the relinquished property sale proceeds, and acquires the replacement property for you. The agreement must prevent you from receiving, pledging or borrowing the funds until the exchange ends. The IRS has warned investors to be careful in selecting an intermediary because some have failed, and the best-known case, LandAmerica 1031 Exchange Services, filed for bankruptcy in 2008 with client funds frozen in investments that could not be sold.
Who cannot be your 1031 exchange qualified intermediary
The regulation disqualifies anyone who has acted as your agent in the two years before the sale, including your:
- Attorney or accountant (for services other than the exchange itself)
- Real estate agent or broker
- Employee or investment banker
- Close relatives and entities you control
Routine services from banks, title companies and escrow companies do not disqualify them. In practice, most investors use a company that specializes in exchanges.
No Florida license, so you do the vetting
Only a handful of states, such as California, Nevada and Washington, regulate exchange intermediaries; Florida is not one of them. That means anyone can offer the service here. The Federation of Exchange Accommodators, the industry association, publishes questions to ask. These are eight to get answered in writing:
- Are exchange funds held in a segregated account in my name and tax ID, separate from the company’s operating money?
- How many signatures are required to move my funds, and do I have to approve each withdrawal?
- What fidelity bond, crime and errors and omissions coverage does the company carry, and does it cover cyber fraud?
- Who audits the company, and can I see a recent report?
- Does the staff hold the Certified Exchange Specialist (CES) designation?
- What are the fees, when are they due, and who keeps the interest earned on my funds?
- How does the company verify wire instructions to prevent fraud?
- What happens to my funds if the company fails or is sold?
The 45-day and 180-day rules
The deadlines in the regulation run from the day you transfer the relinquished property, and they are not extended for weekends or holidays:
- 45 days to identify replacement property in writing to your intermediary.
- 180 days to close on it, or by your tax return due date with extensions, whichever comes first.
You can identify up to three properties of any value, any number of properties whose total value is no more than 200% of what you sold, or more under the 95% rule, which requires you to buy almost everything you identify. I cover the calendar in detail in my guide to the 1031 exchange timeline in Miami.
When to bring the intermediary in
Engage your intermediary before you close on the sale, ideally before you sign the contract. The exchange agreement and the assignment of the sale contract must be in place at closing so the title company wires the proceeds to the intermediary, not to you. If the money reaches your account, it is too late. Tell the title company about the exchange on day one.
Buying before you sell: reverse exchanges
In a tight market you may find the replacement first. A reverse exchange under Revenue Procedure 2000-37 lets an exchange accommodation titleholder hold title to one of the properties while you sell the other, within the same 45- and 180-day limits. It is more complex and more expensive, so ask your intermediary early if it might apply.
Taxes and reporting
Florida has no personal income tax, so for Florida residents the deferral is mainly federal. You report the exchange on IRS Form 8824 with your return for the year of the sale. Work with your CPA on the numbers, especially if you receive cash or take on less debt, which can create taxable boot. For the bigger picture, read my guide to buying Miami 1031 exchange properties and whether Miami luxury real estate is a good investment in 2026.
Frequently Asked Questions
Can my real estate agent or attorney be my qualified intermediary?
No. Anyone who acted as your agent in the two years before the sale, including your attorney, accountant, real estate agent or employee, is a disqualified person under the 1031 regulations.
Are qualified intermediaries licensed in Florida?
No. Florida does not license or regulate exchange intermediaries, so investors should ask about segregated accounts, bonding and insurance before signing an exchange agreement.
What are the 1031 exchange deadlines?
You have 45 days from the sale to identify replacement property in writing and 180 days, or your tax return due date if earlier, to complete the purchase.
When should I hire a qualified intermediary?
Before closing on the sale, ideally before you sign the contract, so the exchange agreement is in place and the proceeds go directly to the intermediary.
What happens if I receive the sale proceeds?
If you receive or control the funds, the exchange generally fails and the gain becomes taxable in that year.
Selling an investment property in Miami?
I coordinate the listing with your intermediary, attorney and CPA so the exchange deadlines drive the plan, not the other way around. Reach out through the contact page or call (786) 801-4442. I work in English and Spanish.
Lea esta guía en español: intermediario calificado para un intercambio 1031.
About Erika Schell, P.A.
Erika Schell is a Luxury Certified REALTOR® with The Keyes Company, affiliated with Forbes Global Properties, and an 8-time Top Producer at Keyes Doral serving buyers, sellers, and investors across Miami-Dade County. Florida Real Estate License #3366404. With a Master’s in Finance and more than 20 years of corporate experience, Erika brings the precision of a financial analyst to every luxury transaction. This article is general information, not tax or legal advice; work with a CPA and a qualified intermediary on any 1031 exchange. Sources: Treasury Regulation 1.1031(k)-1; IRS Fact Sheet 2008-18 and Form 8824 guidance; Federation of Exchange Accommodators, how to choose a QI; IRS Revenue Procedure 2000-37.