Can My CPA Handle My 1031 Exchange? Here’s What You Need to Know

Your CPA is likely one of your most trusted financial advisors. They know your tax situation inside and out, and they’ve probably helped you navigate complex financial decisions before. So it’s natural to wonder if they can handle your 1031 exchange. However, the answer isn’t as simple as you might think.

The Legal Requirement for CPAs and 1031 Exchange

Here’s the crucial detail many investors don’t realize: IRS regulations specifically require a Qualified Intermediary (QI) to facilitate your 1031 exchange. Your CPA, while expertly versed in tax matters, is actually disqualified from serving as your QI if they’ve provided you with accounting, tax, or legal advice within the two years before your exchange.

Why the Restriction?

This rule exists for good reason. The IRS wants to ensure that the exchange is handled by an independent third party with no prior financial relationship to the exchanger. This helps prevent potential conflicts of interest and ensures the integrity of the exchange process.

The Role of Your CPA

While your CPA can’t serve as your QI, they still play a valuable role in your 1031 exchange:

• Advising on the tax implications of your exchange
• Helping evaluate potential replacement properties
• Ensuring the exchange aligns with your overall tax strategy
• Coordinating with your QI on tax documentation

A Team Approach

The most successful 1031 exchanges typically involve collaboration between:

• Your Qualified Intermediary
• Your CPA
• Your real estate agent
• Your attorney (if applicable)
• Your financial advisor

Each professional brings their expertise to the table, working together to ensure your exchange succeeds while maintaining compliance with IRS regulations.

The Bottom Line of CPAs and 1031 Exchanges

While your CPA is an invaluable advisor in your 1031 exchange, they legally cannot replace the role of a Qualified Intermediary. The good news? When you work with both professionals, you get the best of both worlds: your CPA’s tax expertise and your QI’s specialized exchange knowledge.

Looking to start your 1031 exchange? Contact WealthBuilder 1031 at 888-508-1901. We’re happy to work alongside your CPA to ensure your exchange is both compliant and optimized for your financial goals.