Short answer: A 1031 exchange facilitator is the independent company that holds your sale proceeds and handles the exchange paperwork so you never touch the money. The tax regulations call this role a qualified intermediary; accommodator and exchange intermediary mean the same thing. You need one in place before your sale closes.
Reviewed by Jon Hilley. Last updated September 29, 2026.
Facilitator, accommodator, exchange intermediary and qualified intermediary all describe the same job. The tax regulations use "qualified intermediary," and some state laws use "exchange facilitator." Whatever the name, this is the independent party that steps into your sale and purchase so the proceeds go to it, not to you, which is what keeps your 1031 exchange tax-deferred.
If you receive the sale money, even briefly, the exchange fails. That is why the facilitator must be engaged and the exchange documents signed before your sale closes.
Key rules
- No actual or constructive receipt: Using a qualified intermediary is a safe harbor that keeps you from being treated as receiving the proceeds (Treas. Reg. §1.1031(k)-1(g)(4))
- Paperwork on or before closing: You need a written exchange agreement, an assignment of the sale contract to the intermediary, and written notice of the assignment to all parties on or before the transfer date (Treas. Reg. §1.1031(k)-1(g)(4)(v))
- Your own advisers cannot serve: Your attorney, accountant, real estate agent, employee or investment banker within the past two years, and related parties, are disqualified (Treas. Reg. §1.1031(k)-1(k))
- Funds are locked in: The exchange agreement must limit your right to the money; generally, funds come out only after day 45 if nothing was identified, or after you receive all the identified property you are entitled to or day 180 passes (Treas. Reg. §1.1031(k)-1(g)(6))
- Some states regulate facilitators: California requires bonding or insurance and sets fund-handling rules (Cal. Fin. Code §51000 et seq.)
What a 1031 exchange facilitator does
- Prepares the exchange agreement and the assignment of your sale contract.
- Sends notice of the assignment to the buyer and closing agent, and gives closing instructions so the net proceeds are wired to the facilitator.
- Holds the funds in a qualified escrow or trust account during the exchange.
- Receives your written 45-day identification and tracks your deadlines.
- Assigns your replacement purchase contract and wires the funds to that closing.
- Provides the records your preparer needs for Form 8824.
For reverse and improvement exchanges, the facilitator or an affiliate also acts as an exchange accommodation titleholder, holding title to property during the exchange under Rev. Proc. 2000-37.
Who can facilitate a 1031 exchange?
Any independent person or company that is not your agent or a related party can serve, and most investors use a 1031 exchange qualified intermediary that handles exchanges full time. You cannot act as your own facilitator. The rules exist to keep the money away from you and from anyone acting as your agent. Your CPA, your real estate attorney or your broker generally cannot hold your exchange funds if they have worked for you in the two years before the sale. Family members and entities you control are also out. There is an exception for routine financial, title insurance and escrow services, so your title company can still close the sale.
How facilitators are regulated
There is no federal license for 1031 exchange facilitators. A few states, including California, Nevada and Washington, impose bonding or insurance requirements and rules on how exchange funds are held. Elsewhere, it is largely up to you to check. Ask any facilitator:
- Bond and insurance: Do you carry a fidelity bond and errors and omissions insurance, and for how much?
- Account structure: Are my funds held in a segregated qualified escrow or trust account?
- Wire controls: How do you verify wiring instructions and guard against wire fraud?
- Industry membership: Are you a member of the Federation of Exchange Accommodators, the trade association for qualified intermediaries?
- Experience: How many exchanges have you handled, and who will I work with directly?
How much does a 1031 exchange facilitator charge?
Qualified intermediary fees vary by firm and by the type of exchange, so ask for the full fee in writing before you sign. At 1031 Specialists, a standard delayed exchange is $1,195, paid from the proceeds when your sale closes. Reverse exchanges are $7,995 and improvement exchanges are $9,995, because they require an accommodation titleholder to hold property. We have completed more than 1,000 exchanges over 25+ years for investors in all 50 states.
Example: how the money moves in a standard exchange
- Sale price of relinquished property: $650,000
- Selling costs, including commission, title, transfer tax and the facilitator fee: $39,000
- Mortgage paid off at closing: $250,000
- Net proceeds wired to the facilitator: $361,000
- Replacement property price: $700,000
- Exchange funds wired by the facilitator to the purchase closing: $361,000
- New mortgage on the replacement: $339,000
- Cash paid to you at any point: $0
The replacement price of $700,000 is more than the $611,000 net sale price, all $361,000 of equity is reinvested, and the $339,000 new loan more than replaces the $250,000 of debt paid off. The gain is fully deferred, ignoring purchase-side closing costs for simplicity. Had the $361,000 been wired to your own account instead, even for a day, the entire gain would be taxable.
State rules
Facilitator licensing, bonding and fund-handling rules vary by state, and California also has its own withholding and reporting rules for exchanges of California property. See our 1031 exchange by state guide for the rules where your property is located.
Common mistakes
- Calling after closing. The most common problem we see is a seller who contacts a facilitator after the proceeds have already reached them. At that point, no exchange is possible.
- Using a friend or adviser to hold the money. We see investors ask their long-time accountant or attorney to hold the funds. That person is a disqualified agent, and the exchange fails.
- Choosing on price alone. The fee is small next to the tax at stake. Ask about bonding, insurance, segregated accounts and wire controls before you choose.
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