We hear many questions about 1031 exchanges. Some of the most common questions revolve around the order in which things are supposed to happen in an exchange. In this article, we are going to talk about whether or not you are allowed to close on your replacement property first in a 1031 exchange.
Order of Operations
What we’re really talking about here is the “order of operations” in which your transaction progresses. In a standard forward exchange, you sell your relinquished property first and then exchange into your replacement property at some point over the following 180 days. But can you switch the order around and acquire your replacement property before disposing of your relinquished property?
Reverse Exchanges
The short answer is yes. This type of transaction is called a reverse exchange (for obvious reasons). In a reverse exchange you can acquire your replacement property first. Then, over the next 180 days you can sell your relinquished property. It’s theoretically the same as a forward exchange, but it takes a little bit more preparation to get it right. Reverse exchanges are great when you’re dealing with a hot seller’s market and you want to lock up a replacement property before it’s too late.
1031 Reverse Exchange Company in MN
The skilled intermediaries at CPEC1031 have two decades of experience helping taxpayers through the ins and outs of their 1031 exchanges. If you are interested in deferring your capital gains taxes on the sale of real property, a 1031 exchange may be the best solution for you! Connect with a qualified intermediary to see if your property qualifies and, if so, how to start the 1031 exchange process. Our qualified intermediaries are available now to answer your questions, advise you throughout your exchange, and prepare your 1031 exchange documents. Contact us today at our downtown Minneapolis office to get started!
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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