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Qualified Exchange Accommodation Arrangements


Qualified Exchange Accommodation Arrangements (QEAA) refer to specific arrangements made to facilitate a tax-deferred real estate exchange, specifically, like-kind exchanges under Section 1031 of the U.S. Internal Revenue Code. Under QEAA, a third party, known as an Exchange Accommodation Titleholder (EAT), temporarily holds one of the properties involved in the transaction. This arrangement allows taxpayers to safely navigate time-sensitive exchange requirements and maintain the tax-deferred status of their real estate investments.


The phonetic representation of the keyword “Qualified Exchange Accommodation Arrangements” in the International Phonetic Alphabet (IPA) would be:/ˈkwɒlɪfaɪd ɪksˈtʃeɪndʒ əˌkɒməˈdeɪʃən əˈreɪndʒmənts/Breaking it down:- Qualified: /ˈkwɒlɪfaɪd/- Exchange: /ɪksˈtʃeɪndʒ/- Accommodation: /əˌkɒməˈdeɪʃən/- Arrangements: /əˈreɪndʒmənts/

Key Takeaways

  1. Qualified Exchange Accommodation Arrangements (QEAAs) are a valuable tool for taxpayers who want to conduct a tax-deferred 1031 exchange by temporarily ‘parking’ the replacement property with an Exchange Accommodation Titleholder (EAT) until the taxpayer can complete the exchange process.
  2. QEAAs must follow specific guidelines outlined in the Internal Revenue Code Section 1031 and Revenue Procedure 2000-37, including the 180-day time limit for parking transactions, and proper documentation of the arrangement to ensure its validity for tax deferral treatment.
  3. The proper use of QEAAs provides substantial benefits to taxpayers, such as allowing for greater flexibility in structuring 1031 exchanges while minimizing potential risks and ensuring compliance with tax laws.


Qualified Exchange Accommodation Arrangements (QEAA) is an important concept in business and finance as it enables investors to defer taxes on the exchange of like-kind properties under Section 1031 of the Internal Revenue Code. By implementing a QEAA through an Exchange Accommodation Titleholder (EAT), an investor can temporarily park either their relinquished or replacement property, providing them the flexibility to satisfy the strict 1031 exchange timelines and requirements. As a result, this tax deferral strategy facilitates the efficient use of capital and resources for property owners, fostering economic growth and wealth preservation. In addition, QEAAs encourage investment in real estate by providing tax incentives and mitigating potential financial risks associated with property transactions.


Qualified Exchange Accommodation Arrangements (QEAA) serves as a useful mechanism for investors and businesses, primarily aiming to facilitate smooth transactions and optimize tax efficiency during property exchanges. The purpose of QEAA is to align with the rules created by the Internal Revenue Service (IRS) in the United States for tax deferment on profits gained through property exchanges. With the help of QEAA, investors and companies can temporarily park a property in a holding entity, referred to as an Exchange Accommodation Titleholder (EAT), allowing them to simultaneously manage the disposition of an existing property and acquisition of a replacement property, without triggering immediate tax liabilities. This strategic approach provides investors with the opportunity to defer taxes on capital gains, which may be incurred from the exchange of properties, as long as the “like-kind” exchange rules are satisfied.

By leveraging Qualified Exchange Accommodation Arrangements, participants in the real estate or property businesses can uphold their financial interests in a diligently planned manner. It is used extensively for addressing and managing scenarios wherein the replacement property becomes available before the relinquished property is sold, also known as a reverse exchange or reverse 1031 exchange. QEAA provides a safety net for investors, as it helps avoid a rushed sale of the relinquished property and allows them to wait for optimal market conditions or suitable buyers. Consequently, this powerful financial planning tool streamlines the property exchange process and empowers individuals and organizations to better control their investments and maintain tax compliance, ultimately leading to both short-term and long-term financial benefits for the parties involved.


Qualified Exchange Accommodation Arrangements (QEAA) are a provision within Internal Revenue Code (IRC) Section 1031, which allows taxpayers to defer the capital gains tax on the exchange of investment properties. These provisions enable investors to temporarily park replacement properties in an exchange transaction when the successful completion of a simultaneous exchange is not possible.

Here are three real-world examples of Qualified Exchange Accommodation Arrangements:

1. Reverse 1031 Exchange: A real estate investor based in California has identified a rental property they want to acquire in Texas. However, they haven’t yet sold their current rental property in California. In this case, they can use a qualified exchange accommodation arrangement (QEAA) as a reverse 1031 exchange. The investor moves forward with purchasing the Texas property first and temporarily holds it with an Exchange Accommodation Titleholder (EAT) while they work on selling the California property. Once they sell the California property, they complete the 1031 exchange by transferring the Texas property’s title from the EAT to themselves.

2. Construction or Improvement Exchange: An investor from New York decides to sell a commercial property and wants to redeploy the capital gains in a newly constructed property in Florida. Because construction can take some time, they enter into a Qualified Exchange Accommodation Arrangements (QEAA). The investor uses an Exchange Accommodation Titleholder (EAT) to temporarily hold the land title during the construction period. Once the property is built, they complete the 1031 exchange by transferring the Florida property’s title from the EAT to the investor.

3. Parking Arrangement to Facilitate a 1031 Exchange: A restaurant owner in Chicago wants to do a 1031 exchange to combine their multiple locations into a larger property. They find an ideal location for sale, but the transaction is time-sensitive. To secure the new property, they enter into a Qualified Exchange Accommodation Arrangements (QEAA) to temporarily “park” the new property with an Exchange Accommodation Titleholder (EAT). This arrangement gives them extra time to market and sell their existing properties. Once their existing properties are sold, they can then finalize the 1031 exchange by transferring the parked property’s title from the EAT to themselves.

Frequently Asked Questions(FAQ)

What is a Qualified Exchange Accommodation Arrangement (QEAA)?

A Qualified Exchange Accommodation Arrangement is a tax strategy under Section 1031 of the Internal Revenue Code (IRC). It allows real estate investors in the United States to defer capital gains taxes on the sale of an investment property by temporarily transferring the property to an Exchange Accommodation Titleholder (EAT) and acquiring a “replacement” property of like-kind within a specific time frame.

How does the QEAA process work?

In a QEAA, an investor who wants to sell their property (relinquished property) enters into an agreement with an EAT. The EAT takes the title of the relinquished property and holds it, facilitating a tax-deferred exchange. The investor then must identify a replacement property within 45 days and close on it within 180 days, meeting the terms of a traditional 1031 exchange. Upon acquisition of the replacement property, the EAT transfers the title back to the investor, who then assumes ownership.

What role does an Exchange Accommodation Titleholder (EAT) play in a QEAA?

The EAT is typically a qualified intermediary or a separate Special Purpose Entity (SPE) that functions as an independent, temporary holder of the relinquished property. The primary responsibility of the EAT is to facilitate the 1031 exchange process by taking title to the disposed property and holding it until the replacement property is acquired.

What are the benefits of a QEAA?

The main benefit of a QEAA is the deferral of capital gains taxes due from the sale of an investment property. By using a QEAA and adhering to the requirements of a 1031 exchange, investors can potentially save a significant amount of money on taxes and utilize those savings to invest in other income-generating properties, therefore stimulating further capital growth.

Are there any specific deadlines in a QEAA?

Yes, there are two crucial deadlines in a QEA

Can a QEAA be used for personal property, or is it limited to real estate?

A QEAA is primarily designed for real estate transactions, and as of the Tax Cuts and Jobs Act of 2017, Section 1031 exchanges involving personal property are no longer eligible for tax deferral.

What are the criteria for a property to qualify for a QEAA and subsequent 1031 exchange?

The main criteria for a property to qualify for a 1031 exchange and QEAA are: 1. Both the relinquished property and the replacement property must be held for productive use in a trade or business or for investment purposes. 2. The properties exchanged must be of like-kind, meaning they are of the same nature or character, though not necessarily of the same grade or quality. 3. The investor must adhere to the 45-day identification and 180-day exchange periods.

Related Finance Terms

  • Like-Kind Exchanges
  • Internal Revenue Code Section 1031
  • Reverse 1031 Exchanges
  • Qualified Intermediary (QI)
  • Capital Gains Tax Deferral

Sources for More Information

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