A tax deferred exchange is a transaction involving the sale or purchase of an investment property or property help for productive use in a trade or business which meets requirements of section 31 of the internal revenue code and qualifies for non-recognition of gains or loss, technically the exchange is tax deferred, not tax free, since the gain deferred in the transaction will be recognized on the ultimate sale of the replacement property received in the exchange. During a tax deferred exchange, the investor may not have constructive receipt of their exchange funds. Therefore, a qualified intermediary (QI) as an independent third party, is needed to facilitate a 1031 Exchange Transaction and hold the funds on behalf of the investor.