Reverse Exchange

Just like its name sounds, a Reverse Exchange is the opposite of a Deferred Exchange. It involves the acquisition of replacement property (the new property) through an exchange accommodation titleholder, with whom it is “parked” for no more than 180 days. During this 180 day period, the taxpayer disposes of its relinquished property (the old property) to close the exchange. Basically, in this form of exchange you are buying the new property before selling the old property. Like the Deferred Exchange, the taxpayer enters into a contract with an exchange facilitator (like WealthBuilder 1031) and follows the strict requirements of the IRS rules.