Reverse Exchange

How To Save Money With
A 1031 Reverse-Exchange!

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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:

  1. The first method is to have an "exchange accommodation title holder" (or "e.a.t.") - acquire the replacement-property and park it for you for up to 180 days.

  2. The second method is to have the "exchange accommodation title holder" take title to your old relinquished-property - which then 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 whole idea here is to park either the replacement-property or the relinquished-property until the ultimate buyer comes along and closes on it (thereby taking it off the market).

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. 

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