If you are looking to 1031 exchange from one piece of investment real estate and invest in another, you may find it easier to begin the acquisition process before you sell off your relinquished property. This is known as a reverse exchange, and while it is quite common, you need to be aware of how to execute this type of 1031 exchange so that you don’t end up making a costly mistake.
At CPEC1031, we’ve handled countless reverse exchanges and know how to simplify the process so that everything goes smoothly. Below, we explore some of the intricacies of a reverse exchange and discuss some potential pitfalls that you’ll want to avoid.
Understanding Reverse Exchanges
In a nutshell, a reverse exchange occurs when a taxpayer acquires their replacement property before selling their relinquished property.
Even though it’s done in reverse, the exchange must still abide by the 45-day Identification Period and 180-day Exchange Period deadlines of the Internal Revenue Code. Those rules state that, after starting your exchange, you have 45 days to identify in writing all of your replacement properties, and 180 days total to complete the exchange.
Reach Out to CPEC1031, LLC
If you’re looking for an intermediary to help facilitate your reverse exchange, look no further than the team at CPEC1031. These exchanges may seem somewhat straightforward, but missing a deadline can cause major financial headaches, so you need to have an experienced intermediary by your side. To learn more about reverse exchanges, or to connect with a qualified intermediary about an exchange that you are considering or already pursuing, reach out to CPEC1031 today at (612) 643-1031.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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