Real estate withholdingDecember 2021 Tax News
1031 (Like-Kind) Exchanges with Insufficient Funds
Effective January 1, 2022, a Qualified Intermediary’s (QI) withholding obligation will be limited to available funds in those situations where the QI does not receive sufficient funds from escrow, or the QI disbursed funds for the purpose of completing an exchange under Internal Revenue Code section 1031.
If a QI does not receive sufficient funds from escrow to pay the withholding (cash-poor exchange), the QI must provide supporting documentation for this transaction and attach it to Form 593. The QI must also enter the amount that should have been withheld on Form 593, Real Estate Withholding Statement, line 34, and certify this is a cash poor transaction by checking the appropriate box and sign on Side 3 of Form 593.
For more information, please go to Real estate withholding.