a person or entity that can legally hold funds to facilitate a section 1031 exchange. Such an intermediary is usually needed to complete a delayed exchange. To be qualified, the intermediary must not be a relative or agent of the exchanging party. As an exception, a real estate agent may serve as intermediary if the current transaction is the only instance in which the agent has represented the exchanging party over the past two years.
Example: Jackson wished to buy land from Inge, but Inge wanted an exchange to defer any capital gains taxes on the sale. They agreed to a delayed exchange so that Jackson would have time to acquire exchange property acceptable to Inge. They hired a title insurance company to act as qualified intermediary to hold the funds needed to acquire the property while the transaction was being completed.
