1031 Exchanges
Reverse 1031 Exchange
A reverse exchange is when you acquire the replacement property through an exchange accommodation titleholder prior to exchanging the property that is already owned.
Overview
A reverse exchange is when you acquire the replacement property through an exchange accommodation titleholder prior to exchanging the property that is already owned. You have 45 days to identify the relinquished property and 180 total days to complete the sale of the identified property and close the reverse 1031 exchange.
How it works
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Acquire the replacement first
You acquire the replacement property through an exchange accommodation titleholder prior to exchanging the property that is already owned.
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Identify the relinquished property (45 days)
You have 45 days to identify the relinquished property.
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Complete the sale (180 days)
You have 180 total days to complete the sale of the identified property and close the reverse 1031 exchange.
Best for
- Investors who must close on a replacement property before selling
- Competitive markets where timing the sale first is impractical
Key considerations
- Reverse exchanges are more complex and typically cost more than delayed exchanges
- Requires an exchange accommodation titleholder structure
- Financing the parked property requires advance planning
FAQs
Why use a reverse exchange?
When you need to acquire the replacement property before your relinquished property has sold.
Is a reverse exchange more complex?
Yes. It involves parking title with an accommodation titleholder and careful coordination. Work closely with your tax and legal advisors.
Start your Texas 1031 with Cedar Top
Tell us about your transaction and we’ll help you get set up. Remember to involve your CPA, attorney, and tax advisor.