What is a QI?

According to the Federation of Exchange Accomodators, a Qualified Intermediary(QI) is described as a professional provider of the mandatory mechanics of an exchange. The use of a QI, as an independent party to facilitate a tax-deferred exchange, is a safe harbor established by the Treasury Regulations. Sometimes QI's are referred to as "accommodators" or "exchange facilitators."

When the taxpayer engages the services of a QI, pursuant to an exchange agreement, the IRS does not consider the taxpayer to be in receipt of the funds. The sale proceeds go directly to the QI, who holds them until they are needed to acquire the replacement property. The QI then delivers the funds directly to the closing agent who deeds the property directly to the taxpayer.

Without a QI, and pursuant to an exchange agreement, the IRS may not define a transaction as an exchange, thereby making it ineligible for tax deferment status.