Glossary term
Qualified Exchange Accommodation Agreement (QEAA)
A qualified exchange accommodation agreement is a written agreement used in certain reverse 1031 exchange safe harbor structures.
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What Is a Qualified Exchange Accommodation Agreement?
A qualified exchange accommodation agreement, or QEAA, is a written agreement used in certain reverse 1031 exchange structures. It is part of the IRS safe harbor that allows an exchange accommodation titleholder to hold replacement or relinquished property while the taxpayer completes a like-kind exchange.
The agreement matters because a reverse exchange is harder than a standard delayed exchange. The taxpayer may need to acquire replacement property before selling the old property, so another party temporarily parks title under the safe harbor rules.
Key Takeaways
- A QEAA is used in certain reverse 1031 exchange arrangements.
- It involves an exchange accommodation titleholder, often called an EAT.
- The agreement must be in writing and satisfy timing and reporting requirements.
- The structure is designed to fit the IRS safe harbor for parked property.
- Missing a requirement can put tax deferral at risk.
How a QEAA Works
Under the safe harbor, qualified indicia of ownership are held by an exchange accommodation titleholder rather than the taxpayer. The taxpayer and the titleholder enter into a written QEAA within the required time. The agreement states that the titleholder holds the property to facilitate a section 1031 exchange and that the parties will report the arrangement consistently with the safe harbor.
The parked property must still fit the broader 1031 exchange requirements. The QEAA does not make a nonqualifying property qualify, and it does not remove the need to satisfy identification, timing, and use rules.
Reverse Exchange Roles
Role or item | Function |
|---|---|
Taxpayer | Seeks tax deferral through a like-kind exchange. |
Exchange accommodation titleholder | Temporarily holds qualified indicia of ownership. |
QEAA | Written agreement establishing the parking arrangement. |
Replacement property | Property the taxpayer wants to acquire. |
Relinquished property | Property the taxpayer intends to sell or exchange away. |
Real Estate Tax Context
QEAAs are highly technical. They are usually handled by exchange professionals, tax advisers, and real estate counsel because timing, title, debt, improvements, and reporting can all affect the exchange.
The agreement is not just paperwork after the fact. It is part of the structure that supports safe harbor treatment. If the arrangement is informal or late, the taxpayer may lose the intended tax deferral.
The Bottom Line
A QEAA is the written agreement that supports certain reverse 1031 exchange parking arrangements. It helps document who holds the property, why it is held, and how the parties intend to satisfy the IRS safe harbor.