The short answer
A nominee, or titleholder, is a person or entity that holds bare legal title to property for another person, the beneficial owner, who keeps control of the property and its income and is treated as the owner for federal tax purposes. In an exchange the taxpayer is the beneficial owner, so the name on the deed can differ from the name on the exchange agreement without breaking the same-taxpayer requirement. The test is substance: the nominee must truly act only on the owner's direction, as Commissioner v. Bollinger and the land trust ruling discussed in Rev. Rul. 2004-86 show.
At a glance
| What the nominee has | Legal title only, with no control over the property or right to its income |
|---|---|
| Who is the taxpayer | The beneficial owner, who reports the income and the exchange |
| Common forms | Illinois-style land trusts, nominee corporations, and titling entities |
| What makes it hold up | A written agency agreement and consistent treatment of the nominee as agent |
The concept comes from agency law, applied to tax ownership by the Supreme Court and the IRS.
In Commissioner v. Bollinger, 485 U.S. 340 (1988), a corporation held record title to apartment complexes under written agreements to hold them 'as nominee and agent' for a partnership. The Court held the partnership, not the corporation, was the owner for tax purposes, and said agency is adequately shown when it is set out in a written agreement when the asset is acquired, the corporation acts as agent for all purposes, and it is held out as agent to third parties.
Rev. Rul. 2004-86 describes Rev. Rul. 92-105, in which an owner put real estate in an Illinois land trust but kept exclusive control of management, renting and selling and the right to all earnings. Because the trustee's only job was to hold and transfer title at the owner's direction, no trust was created, the trustee was 'a mere agent for the holding and transfer of title', and the owner kept direct ownership for federal income tax purposes.
A hypothetical: the land trust sells, the beneficiary exchanges.
Hypothetical figures: a property worth $1,500,000 is recorded in a land trust, with the investor as sole beneficiary holding all management powers. The investor sells through a qualified intermediary and wants the replacement held the same way for privacy.
The investor signs the exchange agreement as the taxpayer; the land trustee signs the deed at the investor's direction. The replacement can be deeded to a new land trust with the investor as beneficiary, since the investor is treated as owning it directly. The beneficial owner reports the exchange on Form 8824. Run your own numbers with your CPA.
It bites when the titleholder has real powers or is treated as an owner elsewhere.
A titleholder that can manage, lease or sell on its own judgment is not a nominee. It may be a trust or an entity that is a separate taxpayer, and then the beneficial owner holds an interest in an entity rather than real estate, which raises the partnership interest exclusion problem.
The idea also explains other exchange roles. A qualified intermediary is treated under Reg. section 1.1031(k)-1(g)(4)(iv) as acquiring and transferring property even when deeds go directly, and in a reverse exchange an accommodation titleholder holds title while the taxpayer is treated as owner, covered in the reverse 1031 exchange guide. For holding replacement property in an entity, see can an LLC do a 1031.
Related questions
Does the qualified intermediary have to take title?
No. Reg. section 1.1031(k)-1(g)(4)(iv) and (v) treat the intermediary as acquiring and transferring property when the contracts are assigned to it and the parties are notified in writing, so deeds can run directly between seller and buyer.
Who receives the Form 1099-S when a nominee is on title?
The settlement agent reports the transferor it identifies at closing. Give it the beneficial owner's taxpayer identification number and the nominee documents early so the form matches the return that reports the exchange.
Is a single-member LLC a nominee?
It is usually treated as a disregarded entity rather than a nominee, but the result is similar: the owner is treated as holding the real estate. See moving from your personal name into an LLC.
Sources
Checked against these publications on September 30, 2026. Rules and figures change; confirm the current version with your CPA or attorney before you act. This page is general information, not tax or legal advice.