Reverse Like-Kind Exchange (IRC §1031)
There are many reasons for setting up a reverse exchange, but the one major reason is to solve the critical issue of finding a way, to take ownership of the replacement property, prior to the sale of the original property in the 1031 exchange. The IRS tax code does NOT allow for the exchanger to exchange into a property already owned. In this case the reverse 1031 exchange becomes the best answer when one has found, and is ready to close on the replacement property. This all happens while your still trying to sell the old, original property. Another reason to setup a reverse 1031 exchange includes securing your replacement property to avoid the risk of possibly loosing that property. Also, this scenario rids yourself of the replacement property “dilemma” once you have sold that old (original) property, because there is a short 45 day window to find a suitable replacement investment property.
If you have decided that a reverse 1031 exchange is the answer for your exchange needs. The next question becomes, what are the type of reverse 1031 exchanges should I choose from. Believe it or not, there are a number of different and viable options available in reverse 1031 exchanges. Please call us to discuss your specific needs.