Los Angeles Qualified Intermediary · IRC §1031
Top 1031 Exchange is a qualified intermediary in Los Angeles, California. We hold your sale proceeds in a segregated account, draft the exchange documents, and track the 45- and 180-day deadlines so a deferral worth six or seven figures does not fail on a date. Once the proceeds reach you, the deferral is gone — there is no repair.
45 days
To identify replacement property in signed writing
180 days
To close, with no extension for weekends or holidays
$0
Owed until your sale actually closes — cancel free
100%
Of interest earned credited to you on the flat-fee plan
The Basics
A 1031 exchange is a transaction under Section 1031 of the Internal Revenue Code that lets an owner of investment or business real property sell it and reinvest the proceeds in like-kind replacement property while deferring federal and California capital gains tax. The tax is deferred, not forgiven — it carries forward into the basis of the new property.
A qualified intermediary, sometimes called an exchange facilitator or accommodator, is a neutral third party that holds the sale proceeds so the seller never takes receipt of them. Treasury Regulation §1.1031(k)-1(g)(4) requires this role for a delayed exchange. If the seller, their agent, or their attorney touches the money, the exchange fails.
Yes, for any delayed or reverse exchange. California additionally regulates the intermediary itself under Division 20.5 of the Financial Code — one of the few states that does — imposing bonding, insurance, and fund-segregation requirements that most states leave to the market.
Before your relinquished property closes escrow. The exchange agreement must be signed and the assignment delivered to escrow prior to transfer of title. After closing, no exchange is available. Engaging a qualified intermediary early costs nothing until the sale actually completes.
| Rule | Requirement | Authority |
|---|---|---|
| Identification deadline | 45 calendar days from the closing of the relinquished property | IRC §1031(a)(3)(A) |
| Exchange deadline | 180 calendar days, or the due date of that year's tax return if earlier | IRC §1031(a)(3)(B) |
| Weekend & holiday rule | No extension. Deadlines do not roll to the next business day | Treas. Reg. §1.1031(k)-1(b) |
| Three-property rule | Identify up to three properties of any value | Treas. Reg. §1.1031(k)-1(c)(4) |
| 200% rule | More than three allowed if combined fair market value is under 200% of the property sold | Treas. Reg. §1.1031(k)-1(c)(4) |
| 95% rule | Exception applying if you acquire 95% of the value identified | Treas. Reg. §1.1031(k)-1(c)(4) |
| Reverse exchange | Permitted through an exchange accommodation titleholder; 180-day parking limit | Rev. Proc. 2000-37 |
| California withholding | 3⅓% of gross sale price; in a deferred exchange the obligation sits with the qualified intermediary, and applies to boot over $1,500 | FTB Form 593 |
| Depreciation recapture | Deferred along with capital gain; taxed at up to 25% federally when finally recognized | IRC §1250 |
| California clawback | Annual filing required until the deferred gain is recognized | FTB Form 3840 |
| LA City transfer tax | 0.45% of sale price | L.A.M.C. §21.9.2 |
| LA County transfer tax | 0.11% of sale price | Cal. R&T Code §11911 |
| Measure ULA | 4% above $5.4M and 5.5% above $10.9M, applied to the entire price, from July 1 2026 | L.A.M.C. §21.9.2 |
| QI fidelity bond (CA) | $1,000,000 minimum, or an equivalent qualified escrow arrangement | Cal. Fin. Code §51003 |
| Reporting form | Filed with your federal return for the year of the exchange | IRS Form 8824 |
The same handful of mistakes account for nearly every blown deferral in Los Angeles. Each one is preventable, and each one has a specific day it happens.
01PRE-CLOSE
The exchange agreement must exist before the relinquished property transfers. Call the week you list, not the week you close. Signing takes about twenty minutes and costs nothing until the sale actually happens.
02DAY 0
Constructive receipt kills the exchange. Funds move from escrow directly into a segregated account we control. You cannot hold the right to demand them back mid-exchange, and neither can your agent.
03DAY 45
It must be written, signed, unambiguous as to the property, and delivered by midnight on day 45. "The Ventura Boulevard building" is not an address. There is no grace period and no cure.
04DAY 45
Any three properties may be identified regardless of value. Beyond three, their combined fair market value cannot exceed 200% of what you sold — unless you actually acquire 95% of what you named.
05DAY 180
Your exchange period is the earlier of 180 days or your return due date for the year of sale. Sell in November and the clock quietly shortens to April 15 unless you file an extension.
06ONGOING
Broker, escrow, lender, and CPA each track their own milestones. Without one neutral party holding a written checklist, the gaps between them are where deferrals die.
How It Works
A delayed exchange runs in four stages: engage an intermediary before closing, sell and secure the proceeds, identify replacement property within 45 days, and acquire it within 180 days. You receive a dated written checklist at each stage.
01
We prepare the exchange agreement, assignment, and notices, and send them to your escrow officer. Nothing is owed until your sale closes.
02
Escrow wires proceeds into a segregated account in your name. Dual authorization is required before a dollar moves. Day 0 begins.
03
We draft the identification, run the three-property and 200% tests with you, and file the signed notice before the deadline.
04
We fund the replacement purchase directly to escrow and deliver the closing package your CPA needs for IRS Form 8824.
Our Services
Six structures cover nearly every situation: forward, reverse, improvement, partial, partnership, and exchanges into passive replacement property. We handle all of them from Los Angeles.
You sell, we hold, you buy within 180 days. The most common structure. Documents drafted from your purchase agreement and delivered straight to escrow, usually the same day.
For when you find the replacement before your sale closes. An exchange accommodation titleholder parks title under the Rev. Proc. 2000-37 safe harbor. Bring us in early for lender coordination.
Exchange proceeds fund construction while an EAT holds title. Only improvements completed and in place by day 180 count toward your value requirement.
For pulling cash out or trading down in debt. We model exactly how much becomes taxable before you commit rather than after.
When some partners want out and some want to exchange. Drop-and-swap, tenancy-in-common conversions, and the holding-period exposure each carries.
Delaware statutory trusts can serve as replacement property, but they are securities. We take no commission and introduce you to registered representatives.
Los Angeles
No. A 1031 exchange defers federal and California capital gains tax, but it does not defer transfer taxes such as Measure ULA, which are owed at closing regardless of structure. California also keeps a permanent claim on gain sourced to a California property even after you exchange out of state.
Worksheet · No. 002
Measure ULA
Measure ULA is a documentary transfer tax rather than a tax on gain, so no exchange structure defers it. It applies to the entire sale price once you cross the threshold, not just the amount above it, which creates a genuine cliff. It can be paid from exchange funds as a transactional expense without creating boot.
FTB Form 593
California withholding on a real property sale is 3⅓% of the gross price. In a deferred exchange the Franchise Tax Board places that obligation on the qualified intermediary rather than on the escrow holder. We must withhold whenever boot paid to you exceeds $1,500, and whenever an exchange fails or does not meet the Section 1031 requirements. A QI that gets this wrong is personally liable for the greater of $500 or 10% of the required withholding — which is one reason we would rather tell you early that a structure will not work.
FTB Form 3840
Trade a Los Angeles fourplex for a property in Texas and California keeps its claim on the California-source gain. Form 3840 is filed every year until that gain is recognized, including years you have no other reason to file a California return.
Prop 13 & Prop 19
A 1031 exchange is a change in ownership for property tax purposes. The replacement property is reassessed at market value. Owners who have held since the eighties are often more surprised by the new property tax bill than by anything in the exchange itself.
Your Funds
Qualified intermediaries are not federally licensed or registered. There is no national registry, no capital requirement, and no examination. California is one of the few states that regulates the business at all, which is a reason to hire locally and a standard to hold any intermediary to.
Segregation
Your funds sit in a separate account in your name at an FDIC-insured institution. Never pooled with other clients, never touching our operating account.
Authorization
No disbursement leaves without your written authorization alongside ours. Wire instructions are confirmed by callback to a number you gave us at signing, never one that arrives by email.
Coverage
Fidelity bond and errors-and-omissions coverage exceeding California's statutory floor, with certificates available on request before you sign anything.
Investment
Funds are held to a prudent investor standard aimed at preservation of principal and same-day availability. Your exchange money is not an investment vehicle.
California Financial Code · Division 20.5
An exchange facilitator doing business in California must maintain a fidelity bond of at least $1,000,000 — or deposit equivalent cash, securities, or a letter of credit, or hold all exchange funds in a qualified escrow or qualified trust. It must additionally carry errors-and-omissions coverage of at least $250,000 or its equivalent, act as custodian of exchange funds under the prudent investor standard, refrain from commingling exchange funds with operating accounts, and notify clients in writing within 10 days of any change of more than 50% in its ownership.Qualified intermediaries are not licensed anywhere in the United States. Our affiliated escrow operation is — as a California escrow agent under the California Escrow Law, Financial Code §17000 et seq., regulated and examined by the Department of Financial Protection and Innovation.
DFPI Escrow Agent License No. 96DBO-63859
That license means periodic regulatory examination of our books and trust accounts, statutory trust-fund handling rules, and a state agency you can complain to. Confirm the license is active and in good standing at dfpi.ca.gov before you send anyone your money — ours included.
Pricing
A standard forward exchange costs $995 flat with 100% of the interest earned on your funds credited back to you, or $0 if you prefer we retain the interest instead. Reverse exchanges start at $3,750 and improvement exchanges at $4,250. Nothing is owed unless your sale closes.
Recommended above ~$400K
$995
per forward exchange
Better on smaller exchanges
$0
we retain the interest
Worked Example · No. 003
Take a $2,000,000 exchange held 120 days at a 4% deposit rate. Interest earned is roughly $26,300. Under the flat fee you pay $995 and keep the interest, netting about $25,300. Under the no-fee option you pay nothing and keep nothing. For most Los Angeles exchanges, the flat fee is worth roughly twenty-five times what it costs.
The crossover sits lower than most people assume. At a 4% deposit rate the interest on a 45-day hold passes $995 at roughly a $200,000 sale price, and on a 90-day hold at roughly $100,000. Above those, the flat fee leaves you ahead. Below them, or if deposit rates fall, the no-fee option genuinely wins. We run your actual figures on the first call and tell you which to take, including when that is the one we make less on.
Interest credited to you is taxable ordinary income in the year received. It is not part of the deferral.
| Structure | Fee |
|---|---|
| Each additional replacement propertyBeyond the first, on any structure | $350 |
| Reverse exchangeIncludes EAT formation, parking arrangement, and holding entity | from $3,750 |
| Improvement / build-to-suit exchangeConstruction draw administration included | from $4,250 |
| Combined reverse and improvementQuoted after a structuring call | quoted |
| Cancelled before your sale closesWhatever the reason, including changing your mind | $0 |
For Professionals
Most of our work comes from the people who see the sale before we do — brokers, escrow officers, CPAs, and counsel across Los Angeles County. We are built to make you look prepared, and we compete with you for nothing.
Before the listing
Send the address and basis and we return a one-page net-after-tax analysis under your logo — deferred versus outright sale, with Measure ULA and reassessment included.
During escrow
We work directly from the purchase agreement and send the assignment and notice package straight to escrow. Your client signs once. Nobody chases anybody.
Any time
Reverse deal, partnership split, a seller who already closed. Call and ask. We answer hypotheticals from professionals without a pitch and without keeping score.
For the office
DRE-approved 1031 and Measure ULA sessions delivered at your office across Los Angeles County. Sixty minutes, real case law, no slide deck of stock photography.
Common Questions
No. If the sale proceeds were disbursed to you, constructive receipt has occurred and the deferral is permanently lost. There is no amendment or late election that repairs it. Call anyway — depending on how funds were handled and whether the deed has recorded, there are occasionally options. Do not spend or move the money before speaking with a qualified intermediary.
You have 45 calendar days from the closing of your relinquished property to identify replacement property in a signed writing, and 180 calendar days to complete the acquisition. Both run concurrently from the same day. Neither extends for weekends or holidays. If your tax return for that year is due before day 180, the exchange period ends on the return due date unless you file an extension.
No. Measure ULA is a documentary transfer tax on the sale itself, not a tax on gain, so no exchange structure defers it. As of July 1, 2026 it applies at 4% above $5.4 million and 5.5% above $10.9 million, calculated on the entire sale price rather than only the amount above the threshold. ULA can, however, be paid out of exchange funds as a transactional expense without creating taxable boot.
Fees for a standard forward exchange in Los Angeles typically run between $800 and $1,500. We charge $995 flat and credit 100% of the interest earned on your funds back to you, or nothing at all if you prefer we keep the interest instead. Reverse exchanges cost more because they require forming an exchange accommodation titleholder, starting at $3,750.
Yes. Cash taken out is called boot and it is taxable, but the remainder of the gain still defers. Reducing your mortgage debt without replacing it creates mortgage boot with the same effect. We model the exact taxable amount before you commit so the decision is made against a number rather than a guess.
Nothing moves. Unlike most tax deadlines, the 45-day and 180-day exchange periods do not roll forward to the next business day when they land on a Saturday, Sunday, or federal holiday. Plan to finish by the Friday before.
Yes, and many Los Angeles owners do. California retains its claim on the California-source gain, and you must file FTB Form 3840 with California every year until that gain is finally recognized — including years you would otherwise have no reason to file a California return. Missing those filings can cause California to assess the deferred gain.
Yes, and this surprises long-term owners more than anything else in the process. A 1031 exchange is a change in ownership for property tax purposes, so the replacement property is reassessed at current market value under Proposition 13. An owner who has held since the 1980s may face a dramatically higher annual tax bill on the new property.
A reverse exchange is used when you need to buy the replacement property before your current one sells. Because you cannot own both simultaneously and still qualify, an exchange accommodation titleholder takes title to one property and parks it for up to 180 days under the safe harbor in Revenue Procedure 2000-37. Reverse exchanges require lender cooperation and should be arranged well before you are in contract.
Yes. A DST interest is treated as a direct interest in real property for Section 1031 purposes, which makes it a common landing spot for owners who want to stop managing tenants. DSTs are securities and can only be sold by a licensed representative. We do not sell them, take no commission from sponsors, and will introduce you to a registered representative if you want to explore it.
For real estate, like-kind is interpreted broadly: nearly any real property held for investment or productive use in a business can be exchanged for nearly any other. An apartment building can be exchanged for raw land, a retail strip, or an industrial building. Your primary residence does not qualify, and since 2018 personal property such as equipment no longer qualifies at all.
Yes. Recapture is deferred along with the capital gain, which matters more than most owners expect. On a building held for twenty years, recapture is often the larger of the two liabilities, and it is taxed at up to 25% federally rather than at long-term capital gains rates. Owners who sell outright are frequently surprised that the recapture bill exceeds the gain bill.
Sometimes. When the IRS issues disaster relief for a federally declared disaster area, it can postpone the 45-day and 180-day deadlines for affected taxpayers, and Los Angeles County has been covered by such declarations. Relief is never automatic — it depends on the specific IRS notice, where the property sits, and where you live. Do not assume you have extra time. Call us the day a declaration is issued and we will check the notice against your dates in writing.
Yes. A qualified intermediary is a neutral party and cannot give legal or tax advice. For partnerships, entity changes, estate planning, or anything with a contested basis, you want your own counsel and CPA. We coordinate with them and deliver the closing package your CPA needs to complete IRS Form 8824.
Start Exchange
Opening an exchange costs nothing and commits you to nothing. If your sale falls through or you change your mind, you owe zero. The only irreversible decision is closing escrow without one.
(213) 320-1099Monday–Friday, 9:00 AM – 5:00 PM Pacific. Escrow officers and brokers use this line too — you reach a person, not a queue.
Tel (213) 320-1099