A reverse 1031 exchange is just one of several types of like-kind exchanges that are available for use by all United States taxpayers. In this article, we are going to talk about how a reverse 1031 exchange allows you to buy first and sell later.
How a Reverse 1031 Exchange Works
A reverse 1031 exchange allows you to first buy your replacement property and sell your relinquished property later. This is the reverse order of operations of how a 1031 exchange typically works. In a forward 1031 exchange (the most common type), you sell your relinquished property first and then acquire your replacement property later to complete the exchange. A reverse exchange works in the opposite direction. It begins with the acquisition of your replacement property and ends with the sale of your relinquished property.
When to Use a Reverse 1031 Exchange
So why would someone want to do a reverse 1031 exchange? Why not just sell your relinquished property first? A reverse exchange can be extremely helpful during a hot real estate market, when there’s a lot of competition for replacement properties. In a forward exchange, you would need to sell your relinquished property before purchasing your replacement property. But in a reverse exchange, you can lock up your replacement property first and ensure it doesn’t get bought up by another party.
Get Help with Your Like-Kind Exchange of Investment Real Estate
If you are looking for help with your like-kind real estate exchange, you’ve come to the right place. CPEC1031, LLC is your go-to guide to all things 1031 exchange. With more than twenty years of experience in the 1031 exchange industry, we are well suited to help you with your next real estate exchange. Whether you need help finding a replacement property, or you simply have questions you need answered about the like-kind exchange process, we are ready and waiting to help you! Reach out to us at our Minneapolis office to learn more about our 1031 exchange services and get your next exchange up and running.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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