Every Exchanger Should Know.........
At a granular level, how your tax deferred exchange transaction is facilitated and whom you select as your Qualified Intermediary has never been more important. This is because the risk associated with exposing your personal and transactional data is the highest it has ever been. In fact, unless you as an investment property owner take special care to ensure that your data is safe within an encrypted environment, you can rest assured that information you want kept secret will only be a few keystrokes away from those with poor intentions.
In addition, the safety of how your hard-earned exchange proceeds are kept on deposit with your Qualified Intermediary should also be a concern. Because the tax deferred exchange industry is largely unregulated, you must make an extraordinary effort to ensure that your 1031 funds are safe and will be available when youy need them. We suggest utilizing a facilitator who does not commingle Exchanger deposits and who deposits your proceeds in a trust account in your name and tax ID number, or in a Qualified Escrow Account. To do otherwise is to place more trust in your QI than is wise.
Every investment property owner already knows that we all operate within a compromised digital environment where safeguards are required to ensure that your personal as well as transactional data is always kept secure. We were recently reminded that this reality extends to every tax deferred exchange transaction as well, when the two largest title company owned Qualified Intermediaries were closed down for a short period due to a ransomware attack. This caused incredible havoc, with some Exchangers being unable to complete their 1031's within their 180 day exchange period and having to report a taxable event rather than a tax free transaction. Therefore, insist that your QI takes the security of your personal data as seriously as you do!
