REVERSE EXCHANGES : TYPE A & B
If the Taxpayer has found his or her replacement property and must close on it prior to the time that the relinquished property is ready to close, then the transaction becomes a “reverse exchange.” The IRS requires that a reverse exchange use one of the two parking procedures below:

A. Relinquished Property Parked Taxpayer acquires replacement property and conveys the relinquished property to the Exchange Accommodation Titleholder (“EAT”), using an exchange intermediary.

B. Replacement Property Parked The EAT acquires the replacement property. The EAT may construct improvements on the property if needed. When the taxpayer’s relinquished property is ready to close, then the taxpayer will exchange the relinquished property for the replacement property through an exchange intermediary.

Additional rules and considerations for reverse exchanges are discussed on pages 13 through 15 of our brochure.
 

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EXCHANGES PERFORMED NATIONWIDE : 1 800 500 1031 : LOCAL OFFICES IN SANTA FE & TELLURIDE : INFO@A1031EXCHANGE.COM

The information on this website is an educational resource only, and not intended as legal, accounting, or tax advice of any kind.
It is recommended that you consult with your own attorney or tax advisor for details before choosing to engage in a 1031 Exchange