Back Leg & Front Leg Reverse Exchanges

Back Leg Reverse Exchange

Reverse exchanges are one type of 1031 exchange that are a bit more complicated than the traditional forward exchange. Due to their complexities it’s important to take extra care when dealing with a reverse exchange. In this article, we are going to talk about the details and benefits of back leg and front leg reverse exchanges.

Reverse Exchanges

  • In a reverse exchange, the Exchange Accommodation Title holding Company (“ EAT ”) takes title to property and holds it for up to 180 days

  • Compared to forward exchanges, reverse exchanges are more costly and complicated

BACK LEG – Parking the Replacement Property

  • The exchangor must identify the relinquished properties that will be sold within 45 days.

  • This gets the new property into your hands after you have closed on the sale of the Relinquished Property.

FRONT LEG – Parking the Relinquished Property

  • Equity in replacement property must exist at the time of purchase equal to the amount of net proceeds that will result from the sale of the relinquished property.

  • Deed Tax may be paid twice.

Contact CPEC1031

Contact the qualified intermediaries at CPEC1031 to start saving money on your next sale of commercial real estate. We have over twenty years of experience facilitating the 1031 exchange process for clients across the United States. To start the 1031 exchange process, reach out to our like-kind exchange intermediaries today. You can find us at our offices in downtown Minneapolis. We also work with clients throughout the state of Minnesota and across the country.

  • Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

 

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