Reverse Exchange

In a Reverse 1031 Exchange the replacement property is acquired before the relinquished 1031 property is sold. The newly issued Revenue Procedure (REV. Proc.2000-37) provides a safe harbor for reverse and build-to-suit reverse 1031 Exchanges. The Rev Proc 2000-37 provides a safe harbor for reverse 1031 exchanges. The procedure provides a guideline on how to properly structure a reverse 1031 exchange.

By structuring a reverse section 1031 tax deferred, like kind exchange the investor can acquire the replacement property before the relinquished 1031 property is sold. This tax planning strategy is particularly beneficial in markets where property demand is high and inventory is low.

A Reverse 1031 exchange can give the Exchanger the flexibility to take the necessary time to locate the ideal replacement property, without the pressure of the forward 1031 exchange deadlines. A Reverse 1031 Exchange can be a valuable investment tool in acquiring a Tenant in Common (TIC) property because it provides the Reverse 1031 Exchanger with flexibility to find and identify a Tenant in Common (TIC) replacement property.

Contact a Reverse 1031 Exchange Specialist today to learn more about Reverse 1031 Exchanges.