A reverse exchange is an approved-technique for purchasing a new replacement property BEFORE you have sold your relinquished property.
This type of exchange is very helpful when you have found the new replacement property that you want, before you have closed on the sale of your relinquished-property.
Basically – there are 2 ways to structure a reverse exchange:
- The first method is to have an EAT “exchange accommodation title holder” acquire the replacement property and park it on your behalf for up to 180 days.
- The second method is to have the EAT “exchange accommodation title holder” take title to your old relinquished property. That enables you to immediately receive your new replacement property. Thereafter, it is necessary to find a buyer to purchase the parked relinquished property.
Each of these options is a short term solution – authorized for up to 180 days.
The idea here is to park either the replacement-property or the relinquished-property until the ultimate buyer comes along.
1031 Tip: When adding property to your portfolio, consider structuring every purchase as a reverse exchange, so that if you sell a relinquished property shortly thereafter, you can match the two properties up and qualify the transactions as a 1031 exchange.
Choose An Experienced Qualified Intermediary
At Commercial Partners Exchange Company, we are well-versed in the 1031 exchange process and have twenty years of experience under our belts. Our intermediaries can put together your 1031 documents, answer your questions, and advise you on the various elements of your exchange. Contact us now to learn a little bit more about the full range of services we provide our clients and set up an appointment to discuss your situation. Our main office is located in downtown Minneapolis but we serve clients all over the state of Minnesota and around the country!