1031 Exchange Blog

REVERSE EXCHANGE

Reverse 1031 Exchange: Considerations in Financing the Purchase of Replacement Property

1031 explained

05/12/21

A reverse 1031 exchange provides an alternative to traditional 1031 exchanges that can be a powerful tool for exchangers. In a hot ...

Body:

In a hot market or market’s with limited inventory, the 45-day identification rules under a 1031 tax deferred exchange can feel like too small a window. (To read more about 1031 exchange process and rules, visit our <a href="https://www.accruit.com/property-owners/1031-exchange-explained"><sp… explained</a> page) Luckily, the <a href="https://www.accruit.com/blog/1031-like-kind-exchanges-myths-vs-realitie… exchange rules</a> provide for the ‘Reverse 1031 Exchange’ to exist. Under the Treasury Regulations, exchanges must be completed in the proper sequence. This means the sale of the relinquished property must take place before the acquisition of the new or replacement property. However, on occasion, the facts are such that a taxpayer wishes to acquire the new property before the sale or risk losing the desired new property. This reverse sequence, also approved by the IRS, is often referred to as a “<a href="https://www.accruit.com/blog/primer-1031-exchanges-and-related-types-ex… 1031 exchange</a>.” The reverse exchange technique essentially consists of an exchange accommodator holding or “parking” title to the new property on behalf of the taxpayer to avoid the taxpayer having simultaneous ownership of two properties. Immediately after the sale of the old property (but no later than 180 days) the exchange accommodator transfers the new property to the taxpayer. This 'technically' creates the proper sequence. Financing the Purchase of the Replacement Property

The concept of a Reverse 1031 exchange can sound attractive to many investors until the reality of financing the purchase of the replacement property is considered.  For investors with the means to purchase the property outright in cash or those with strong lending relationships this can be relatively straightforward, however, for others they must ensure they take some nuances into consideration such as:

<ol>
<li>The title to the replacement property will be parked with an entity created by the Qualified Intermediary for the sole purpose of holding title to the property.  The loan cannot be in the name of the taxpayer, but instead must be in the name of the parking entity.  This requires a short-term bridge loan that can be refinanced into a longer-term loan or paid down once the old property is sold and new property is transferred into the name of the taxpayer.  Many banks will not entertain these loans as they do not fit into their traditional lending model.  It may take some time discussing with several local or regional banks to get them to understand the structure.  </li>
<li>Ensure you have sufficient collateral and equity.  Banks will underwrite the replacement property as well as look at the taxpayers overall financial position to ensure adequate coverage.  Traditionally, banks are willing to lend between 65-75% of the replacement property’s value to qualified buyers depending on the type of property and quality of collateral.</li>
<li>Think about financing well in advance of pursuing a purchase through a reverse 1031 exchange.  Banks take time to order appraisals and underwrite collateral for specialty bridge financing.  This can be several weeks.  If you are in a rush and can’t wait for a bank, there are lenders willing to provide these types of loans, but you are going to pay handsomely for it in rate and upfront fees</li>
</ol>

Financing a reverse  exchange can be more difficult than a traditional loan, but it is common place for 1031s.  Take the time and do the research by speaking with several banks and the right Qualified Intermediary - <a href="https://www.accruit.com/contact-us" title="Start an Exchange with Accruit">Accruit</a>.

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Reverse 1031 Exchange: Considerations in Financing the Purchase of Replacement Property

1031 explained

05/12/21

A reverse 1031 exchange provides an alternative to traditional 1031 exchanges that can be a powerful tool for exchangers. In a hot ...

Improvement and Reverse 1031 Exchanges in Fast Moving Texas Real Estate Markets

reverse exchange

04/28/21

The 1031 exchange rules provide alternatives to the traditional exchange that can be beneficial in places like Dallas or Austin, Texas ...

Body:

In considering selling an investment property in a fast-moving real estate market through a 1031 exchange, owners are rightfully concerned about finding a suitable replacement property. The 45-day identification rules under a 1031 tax deferred exchange can feel like too small a window when supply is limited and there many bidders in the market. (To read more about 1031 exchange process and rules, visit our <a href="https://www.accruit.com/property-owners/1031-exchange-explained" title="1031 Exchange Explained">1031 explained</a> page) In places like Dallas or Austin, Texas attractive properties will receive multiple offers on the first day of listing and can go pending same day. In a fast-paced real estate market, investors are left wondering what do you do when you still want to defer your taxable gain while taking advantage of a fast-paced real estate market from a seller's perspective?<o:p></o:p>

Luckily, the <a href="https://www.accruit.com/property-owners/1031-exchange-explained" title="1031 exchange rules">1031 exchange rules</a> provide alternatives to the traditional exchange that can be beneficial in a tight market. These alternatives are deemed Reverse 1031 Exchanges and Improvement 1031 Exchanges.  <o:p></o:p>

<h2>Reverse 1031 Exchanges</h2>

Under the Treasury Regulations, exchanges must be completed in the proper sequence. This means the sale of the relinquished property must take place before the acquisition of the new or replacement property. However, on occasion, the facts are such that a taxpayer wishes to acquire the new property before the sale or risk losing the desired new property. This reverse sequence is often referred to as a “<a href="https://www.accruit.com/blog/primer-1031-exchanges-and-related-types-ex…; title="reverse 1031 exchange">reverse 1031 exchange</a>”.  <o:p></o:p>

The reverse exchange technique essentially consists of an exchange facilitator holding or “parking” title to the new property on behalf of the taxpayer to avoid the taxpayer having simultaneous ownership of two properties. Immediately after the sale of the old property (but no later than 180 days) the exchange company affiliate transfers the new property to the taxpayer. This 'technically' creates the proper sequence.<o:p></o:p>

For example, an investor holding a commercial investment property in Dallas, Texas is looking to take advantage of the market to sell their property but is concerned about finding the right replacement property in Fort Worth. That investor decided to wait to list their property and found the perfect property replacement 60 days later and purchased it through a Reverse Exchange with the help of an exchange facilitator. Upon closing on the new purchase, the investor can now continue earning rental income on the Dallas property and has 180 days to close on the sale to defer their gain into the newly purchased Fort Worth property.  <o:p></o:p>

<h2>Build-to-Suit or Improvement Exchange</h2>

Build-to-Suit, also known as Construction-to-Suit or <a href="https://www.accruit.com/blog/can-property-improvement-costs-be-part-103…; title="improvement exchange">Improvement Exchange</a> refers to a type of exchange done where some of the proceeds of the sale of the relinquished property will be used to complete improvements on the replacement property so that the taxpayer can finalize the exchange where both the value of the land and the enhanced improvements will count for the amount the taxpayer traded for. Investors may want to build on raw land or put in new heating, ventilating, air conditioning, roof, and windows on an existing property. All of which can qualify if executed properly.<o:p></o:p>

In this type of exchange, the exchange facilitator parks the replacement property on behalf of the taxpayer while the desired improvements are made. Upon the earlier 180 days or the completion of the improvements, the entire value of the real property and improvements is conveyed directly to the taxpayer to complete their exchange.<o:p></o:p>

As an example, an investor owns an office building in Austin, Texas and wants to invest in multi-family units in Houston. However, the only multi-family complexes for sale need significant improvements to command a premium rental income. The investor can engage an exchange facilitator to consummate an <a href="https://www.accruit.com/blog/case-study-property-improvement-exchange-r…; title="improvement exchange of real estate">improvement exchange of real estate</a> whereby the purchase price and improvements to the new multi-family complex can be funded through the tax deferred proceeds of the sale of the commercial property in Austin.  <o:p></o:p>

As you can see, tools are available to real estate investors to defer taxes and grow their portfolios in any environment. Accruit is well versed in executing all types of exchanges. You can reach our Headquarters in Denver, Colorado or our Texas Regional Office in Dallas by calling (800) 237-1031 or emailing <a href="mailto:info@accruit.com">info@accruit.com</a> for more information. <o:p></o:p>

<o:p></o:p>

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Title:

Improvement and Reverse 1031 Exchanges in Fast Moving Texas Real Estate Markets

reverse exchange

04/28/21

The 1031 exchange rules provide alternatives to the traditional exchange that can be beneficial in places like Dallas or Austin, Texas ...

Reverse and Improvement 1031 Exchanges in Red-hot Real Estate Markets like LA

1031 exchange rules

04/28/21

The 1031 exchange rules provide alternatives to the traditional exchange that can be beneficial in places like Los Angeles or San ...

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In considering selling an investment property in a red-hot real estate market through a 1031 exchange, owners are rightfully concerned about finding a suitable replacement property. The 45-day identification rules under a 1031 tax deferred exchange can feel like too small a window when supply is limited and there many bidders in the market. (To read more about 1031 exchange process and rules, visit our <a href="https://www.accruit.com/property-owners/1031-exchange-explained" title="1031 explained">1031 explained</a> page) In places like Los Angeles or San Diego, California attractive properties will receive multiple offers on the first day of listing and can go pending same day. In a fast-paced real estate market, investors are left wondering what do you do when you still want to defer your taxable gain while taking advantage of a fast-paced real estate market from a seller's perspective?

Luckily, the <a href="https://www.accruit.com/blog/1031-like-kind-exchanges-myths-vs-realitie…; title="1031 exchange rules">1031 exchange rules</a> provide alternatives to the traditional exchange that can be beneficial in a tight market. These alternatives are deemed Reverse 1031 Exchanges and Improvement 1031 Exchanges.

Reverse 1031 Exchanges

Under the Treasury Regulations, exchanges must be completed in the proper sequence. This means the sale of the relinquished property must take place before the acquisition of the new or replacement property. However, on occasion, the facts are such that a taxpayer wishes to acquire the new property before the sale or risk losing the desired new property. This reverse sequence is often referred to as a “<a href="https://www.accruit.com/blog/primer-1031-exchanges-and-related-types-ex…; title="reverse 1031 exchange">reverse 1031 exchange</a>”.

The reverse exchange technique essentially consists of an exchange facilitator holding or “parking” title to the new property on behalf of the taxpayer to avoid the taxpayer having simultaneous ownership of two properties. Immediately after the sale of the old property (but no later than 180 days) the exchange company affiliate transfers the new property to the taxpayer. This 'technically' creates the proper sequence.

For example, an investor holding a single-family rental property in Los Angeles, California is looking to take advantage of the market to sell their property but is concerned about finding the right replacement property in Anaheim. That investor decided to wait to list their property and found the perfect property replacement 60 days later and purchased it through a Reverse Exchange with the help of an exchange facilitator. Upon closing on the new purchase, the investor can now continue earning rental income on the Los Angeles property and has 180 days to close on the sale to defer their gain into the newly purchased Anaheim property.

Build-to-Suit or Improvement Exchange

Build-to-Suit, also known as Construction-to-Suit or <a href="https://www.accruit.com/blog/can-property-improvement-costs-be-part-103…; title="improvement exchange">Improvement Exchange</a> refers to a type of exchange done where some of the proceeds of the sale of the relinquished property will be used to complete improvements on the replacement property so that the taxpayer can finalize the exchange where both the value of the land and the enhanced improvements will count for the amount the taxpayer traded for. Investors may want to build on raw land or put in new heating, ventilating, air conditioning, roof, and windows on an existing property. All of which can qualify if executed properly.

In this type of exchange, the exchange facilitator parks there placement property on behalf of the taxpayer while the desired improvements are made. Upon the earlier 180 days or the completion of the improvements, the entire value of the real property and improvements is conveyed directly to the taxpayer to complete their exchange.

For example, an investor owns an apartment rental in San Diego, California and wants to invest in single-family rentals. However, the only single-family rentals for sale need significant improvements to command a premium rental income. The investor can engage an exchange facilitator to consummate an <a href="https://www.accruit.com/blog/case-study-property-improvement-exchange-r…; title="improvement exchange of real estate">improvement exchange of real estate</a> whereby the purchase price and improvements to the new multi-family complex can be funded through the tax deferred proceeds of the sale of the apartment rental.

As you can see, tools are available to real estate investors to defer taxes and grow their portfolios in any environment. Accruit is well versed in executing all types of exchanges. You can reach our offices by calling (800) 237-1031 or emailing <a href="mailto: info@accruit.com" title="info@accruit.com">info@accruit.com</a> for more information.

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Title:

Reverse and Improvement 1031 Exchanges in Red-hot Real Estate Markets like LA

1031 exchange rules

04/28/21

The 1031 exchange rules provide alternatives to the traditional exchange that can be beneficial in places like Los Angeles or San ...

Reverse and Improvement 1031 Exchanges in Hot Florida Real Estate Markets

reverse exchange

04/28/21

The 1031 exchange rules provide alternatives to the traditional exchange that can be beneficial in places like Miami or Jacksonville, Florida ...

Body:

In considering selling an investment property in a red-hot real estate market through a 1031 exchange, owners are rightfully concerned about finding a suitable replacement property. The 45-day identification rules under a 1031 tax deferred exchange can feel like too small a window when supply is limited and there many bidders in the market. (To read more about 1031 exchange process and rules, visit our <a href="https://www.accruit.com/property-owners/1031-exchange-explained" title="1031 explained">1031 explained</a> page) In places like Miami or Jacksonville, Florida attractive properties will receive multiple offers on the first day of listing and can go pending same day. In a fast-paced real estate market, investors are left wondering what do you do when you still want to defer your taxable gain while taking advantage of a fast-paced real estate market from a seller's perspective?

Luckily, the <a href="https://www.accruit.com/blog/1031-like-kind-exchanges-myths-vs-realitie…; title="1031 exchange rules">1031 exchange rules</a> provide alternatives to the traditional exchange that can be beneficial in a tight market. These alternatives are deemed Reverse 1031 Exchanges and Improvement 1031 Exchanges.

Reverse 1031 Exchanges

Under the Treasury Regulations, exchanges must be completed in the proper sequence. This means the sale of the relinquished property must take place before the acquisition of the new or replacement property. However, on occasion, the facts are such that a taxpayer wishes to acquire the new property before the sale or risk losing the desired new property. This reverse sequence is often referred to as a “<a href="https://www.accruit.com/blog/primer-1031-exchanges-and-related-types-ex…; title="reverse 1031 exchange">reverse 1031 exchange</a>”.

The reverse exchange technique essentially consists of an exchange facilitator holding or “parking” title to the new property on behalf of the taxpayer to avoid the taxpayer having simultaneous ownership of two properties. Immediately after the sale of the old property (but no later than 180 days) the exchange company affiliate transfers the new property to the taxpayer. This 'technically' creates the proper sequence.

For example, an investor holding a commercial investment property in Jacksonville, Florida is looking to take advantage of the market to sell their property but is concerned about finding the right replacement property in Tampa Bay. That investor decided to wait to list their property and found the perfect property replacement 60 days later and purchased it through a Reverse Exchange with the help of an exchange facilitator. Upon closing on the new purchase, the investor can now continue earning rental income on the Jacksonville property and has 180 days to close on the sale to defer their gain into the newly purchased Tampa Bay property.

Build-to-Suit or Improvement Exchange

Build-to-Suit, also known as Construction-to-Suit or <a href="https://www.accruit.com/blog/can-property-improvement-costs-be-part-103…; title="improvement exchange">Improvement Exchange</a> refers to a type of exchange done where some of the proceeds of the sale of the relinquished property will be used to complete improvements on the replacement property so that the taxpayer can finalize the exchange where both the value of the land and the enhanced improvements will count for the amount the taxpayer traded for. Investors may want to build on raw land or put in new heating, ventilating, air conditioning, roof, and windows on an existing property. All of which can qualify if executed properly.

In this type of exchange, the exchange facilitator parks there placement property on behalf of the taxpayer while the desired improvements are made. Upon the earlier 180 days or the completion of the improvements, the entire value of the real property and improvements is conveyed directly to the taxpayer to complete their exchange.

For example, an investor owns an apartment rental in Miami, Florida and wants to invest in single-family rentals. However, the only single-family rentals for sale need significant improvements to command a premium rental income. The investor can engage an exchange facilitator to consummate an <a href="https://www.accruit.com/blog/case-study-property-improvement-exchange-r…; title="improvement exchange of real estate">improvement exchange of real estate</a> whereby the purchase price and improvements to the new multi-family complex can be funded through the tax deferred proceeds of the sale of the apartment rental.

As you can see, tools are available to real estate investors to defer taxes and grow their portfolios in any environment. Accruit is well versed in executing all types of exchanges. You can reach our offices by calling (800) 237-1031 or emailing <a href="mailto: info@accruit.com" title="info@accruit.com">info@accruit.com</a> for more information.

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Title:

Reverse and Improvement 1031 Exchanges in Hot Florida Real Estate Markets

reverse exchange

04/28/21

The 1031 exchange rules provide alternatives to the traditional exchange that can be beneficial in places like Miami or Jacksonville, Florida ...

Reverse and Improvement 1031 Exchanges in Hot Real Estate Markets

04/20/21

What do you do when you still want to defer your taxable gain while taking advantage of a hot real ...

Body:

In considering selling an investment property in a hot real estate market through a 1031 exchange, owners are rightfully concerned about finding a suitable replacement property. The 45-day identification rules under a <a href="https://www.accruit.com/blog/%C2%ADare-tax-deferred-exchanges-real-esta… tax deferred exchange</a> can feel like too small a window when supply is limited and there are many bidders in the market. (To read more about 1031 exchange process and rules, visit our <a href="https://www.accruit.com/property-owners/1031-exchange-explained" title="1031 Exchange Explained">1031 exchange explained</a> page) In places like Denver, Colorado or Salt Lake City, Utah attractive properties will receive multiple offers on the first day of listing and can go pending same day. So, what do you do when you still want to defer your taxable gain while taking advantage of a hot real estate market from a seller's perspective?<o:p></o:p>

Luckily, the <a href="https://www.accruit.com/property-owners/1031-exchange-explained">1031 exchange rules</a>  provide alternatives to the traditional exchange that can be beneficial in a tight market. These alternatives are deemed Reverse 1031 Exchanges and Improvement 1031 Exchanges.  <o:p></o:p>

<o:p></o:p>

<h3 class="MsoNormal">Reverse 1031 Exchanges<o:p></o:p></h3>

Under the Treasury Regulations, exchanges must be completed in the proper sequence. This means the sale of the relinquished property must take place before the acquisition of the new or replacement property. However, on occasion, the facts are such that a taxpayer wishes to acquire the new property before the sale or risk losing the desired new property. This reverse sequence is often referred to as a “<a href="https://www.accruit.com/blog/primer-1031-exchanges-and-related-types-ex… 1031 exchange</a>” and codified in the tax code.  <o:p></o:p>

The reverse exchange technique essentially consists of an exchange facilitator holding or “parking” title to the new property on behalf of the taxpayer to avoid the taxpayer having simultaneous ownership of two properties. Immediately after the sale of the old property (but no later than 180 days) the exchange company affiliate transfers the  new property to the taxpayer. This 'technically' creates the proper sequence.<o:p></o:p>

For example, an investor holding a multi-family rental property in Denver is looking to take advantage of the hot market to sell their property but is concerned about finding the right replacement property in Colorado Springs. That investor decided to wait to list their property and found the perfect property replacement 60 days later and purchased it through a Reverse Exchange with the help of an exchange facilitator. Upon closing on the new purchase, the investor can now continue earning rental income on the Denver property and has 180 days to close on the sale to defer their gain into the newly purchased Colorado Springs property.  <o:p></o:p>

<h3 class="MsoNormal">Build-to-Suit or Improvement Exchange<o:p></o:p></h3>

Build-to-Suit, also known as Construction-to-Suit or <a href="https://www.accruit.com/blog/can-property-improvement-costs-be-part-103… Exchange</a> refers to a type of exchange done where some of the proceeds of the sale of the relinquished property will be used to complete improvements on the replacement property so that the taxpayer can finalize the exchange where both the value of the land and the enhanced improvements will count for the amount the taxpayer traded for. Investors may want to build on raw land or put in new heating, ventilating, air conditioning, roof, and windows on an existing property. All of which can qualify if executed properly.<o:p></o:p>

In this type of exchange, the exchange facilitator parks the replacement property on behalf of the taxpayer while the desired improvements are made. Upon the earlier 180 days or the completion of the improvements, the entire value of the real property and improvements is conveyed directly to the taxpayer to complete their exchange.<o:p></o:p>

As an example, an investor owns a commercial property in Salt Lake City and wants to invest in new vacation rental units in Park City. However, the only homes for sale need significant improvements to command a premium rental income. The investor can engage an exchange facilitator to consummate an <a href="https://www.accruit.com/blog/case-study-property-improvement-exchange-r… exchange of real estate</a> whereby the purchase price and improvements to the vacation rental properties can be funded through the tax deferred proceeds of the sale of the commercial property in Salt Lake City.  <o:p></o:p>

As you can see, tools are available to real estate investors to defer taxes and grow their portfolios in any environment. <a href="https://www.accruit.com/" title="Accruit">Accruit</a> is well versed in executing all types of exchanges. You can reach our Headquarters in Denver, Colorado or our Western Regional Office in Dillion, Montana by calling (800) 237-1031 or emailing <a href="mailto:info@accruit.com">info@accruit.com</a> for more information. <o:p></o:p>

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Title:

Reverse and Improvement 1031 Exchanges in Hot Real Estate Markets

04/20/21

What do you do when you still want to defer your taxable gain while taking advantage of a hot real ...

Why Your Next 1031 Exchange Should be a Reverse Exchange

12/16/20

In a reverse exchange, the replacement property is acquired before the replacement property is sold. Although a seemingly more complex ...

Body:

The majority of all 1031 exchanges are structured as either forward delayed exchanges or simultaneous exchanges. This is likely because of the perceived ease in completing such exchanges. But failing to consider a reverse exchange could be costing many taxpayers more than they think. Let’s compare the exchange strategies of two siblings, Jean, and her brother Jeremy.

<h2>Forward Exchange</h2>

Jeremy is certain that a forward delayed exchange is the best way to handle the exchange of his investment property. His current property – which we will call Strawberry Field – is worth around $400,000 and yields about $3,000 in monthly rental income.

On March, Jeremy enters into a contract to sell Strawberry Field for $400,000, with closing scheduled for April 1. Closing occurs without delay, after which the $400,000 in exchange proceeds are wired to his qualified intermediary (“QI”). The QI is paid $1,000 for its services, leaving Jeremy with $399,000 to reinvest. Jeremy promptly starts looking for appropriate replacement properties. He is targeting single-family or condo-style properties near the local university. On May 15, Jeremy submits his identification list, designating three potential replacement condos, each worth $200,000. By the end of the month, Jeremy has been able to negotiate contracts for the purchase of two of the condos. Closings for the condos are scheduled for July 31. As a result of some title-related delays, Jeremy is able to complete the acquisition of the two condos on August 31, 152 days, or a full five months after he sold Strawberry Field. Jeremy has lost five months of rental income, $15,000, and paid $1,000 to his qualified intermediary, for a “loss” of $16,000.

<h2>Reverse Exchange</h2>

Jean was always the more analytical of the siblings. She consulted her QI months before she began the process of upgrading her investment situation, and has determined that a reverse exchange better suits her needs. A reverse exchange is one that takes place in a reverse sequence, that is, the replacement property is effectively acquired before the old property is sold. While a taxpayer is not allowed to directly acquire the new property first, a <a href="http://https://www.accruit.com/blog/are-1031-reverse-tax-deferred-excha… exchange structure</a> using an exchange company can accomplish the same thing. Jean’s current investment property – which we will call Solsbury Hill – is worth around $400,000 and yields about $3,000 in monthly rental income.

On February 1, Jean enters into a contract to acquire Paisley Park, a fully occupied rental property, for $400,000. Closing is scheduled for April 1. Jean coordinates with her QI to structure this acquisition as the replacement property for a reverse exchange. Accordingly, with the QI’s aid, she forms a new LLC – Paisley Park LLC – to take title to Paisley Park. Formation of the LLC cost her about $500 including the legal fees, and the QI’s related exchange accommodation titleholder (“EAT”) was listed as the sole member of the entity. On April 1, Paisley Park LLC acquires Paisley Park, which is generating approximately $3,000 per month. Allowing the EAT to take title on her behalf, she is not considered to have acquired it herself but has taken it off the market and preserved her ability to use it as her replacement property once the relinquished property is sold.

Jean enlists the aid of her friendly real estate agent and begins marketing the sale of Solsbury Hill. Jean and her real estate agent successfully negotiate the sale of Solsbury Hill, and on June 1 she enters into a contract to sell the property for $400,000, with closing scheduled for August 1. As a result of some financing related delays, Jean’s buyer is finally able to complete the acquisition of Solsbury Hill on August 31. This is closed as the first leg of a routine forward exchange using the QI. Once closed, Jean is ready to <a href="https://www.accruit.com/blog/case-study-forward-exchange-real-estate">f… her exchange</a>. At this time, the EAT transfers membership of Paisley Park LLC to Jean, officially cementing Jean as the owner of Paisley Park. From the time Jean acquired Paisley Park until she disposed of Solsbury Hill was five calendar months. During this time, she had combined cash flow on the two properties of $30,000. She did have to pay $500 for the formation of the LLC, and her exchange fees were about $4,000, so she had net income of $25,500 during the same time when Jeremy had net losses of $16,000 – a difference of over $41,000.

<h2>The Bottom Line</h2>

For exchangers who have the financial capacity to do so, structuring transactions as reverse exchanges is an option that is often overlooked. Among other things, it takes away the pressure of having to narrow down choices of possible replacement property within 45 days of a sale of the original property. Consulting with a QI, as well as tax and legal advisors before embarking on the sale of investment real estate is highly recommended. The skilled and experienced team at Accruit can help structure forward and reverse exchanges, and even non-safe harbor reverse exchanges that may take longer than 180 days to complete.

<a href="https://cta-redirect.hubspot.com/cta/redirect/6205670/420491a0-24fe-4b8… alt="ask a qualified intermediary 1031 exchange questions" class="hs-cta-img" height="74" id="hs-cta-img-420491a0-24fe-4b8e-bf05-f2bf216b525f" src="https://no-cache.hubspot.com/cta/default/6205670/420491a0-24fe-4b8e-bf0…; style="border-width:0px;" width="787" /></a><script charset="utf-8" src="https://js.hscta.net/cta/current.js"></script><script type="text/javascript"> hbspt.cta.load(6205670, '420491a0-24fe-4b8e-bf05-f2bf216b525f', {}); </script>

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Title:

Why Your Next 1031 Exchange Should be a Reverse Exchange

12/16/20

In a reverse exchange, the replacement property is acquired before the replacement property is sold. Although a seemingly more complex ...

REVERSE EXCHANGE

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