Escrow
The segregated, protected account where your exchange proceeds are held between the sale and purchase.
Definition
Escrow is a segregated account, controlled by a neutral party, that holds your exchange funds between closings so you never take receipt of them. A "qualified escrow account" or qualified trust is one of the safe-harbor arrangements the IRS recognizes for keeping proceeds out of your constructive receipt. xchange1031 holds funds in FDIC-insured escrow and requires two separate people to approve any movement of money.
Why it matters
How and where your money is held is the heart of a QI’s job. Dual-approval controls and insured accounts are what protect proceeds that can run into the millions. See how your money is protected.
Related terms
General education — not tax or legal advice. This explains how §1031 exchanges work in general terms and uses simplified assumptions. Rules and tax rates change and your situation is specific. Talk to a qualified CPA or tax attorney before you rely on any of it. See our full terms & legal notice.