Right now, the real estate market is so hot that it is difficult to find a replacement property in the time allotted by the 1031 exchange regulations (45 days to identify the property and 180 days to close). So a lot of smart investors are going out and buying their replacement property first in a reverse 1031 exchange because they know the easy part will be selling their relinquished property.
Lining Up Your Replacement Property
There’s a big corporation in Minnesota that’s buying a new headquarters building in a western suburb. They’re buying the land, and arranging the construction in a reverse exchange to build out the property. Once that replacement property is under way and they’ve made enough headway on the construction, the easy part will be selling their old relinquished property.
So lining up your replacement property and locking it down with either a purchase agreement or actually having an intermediary purchase and hold it for you is a way to ensure that you’re going to have replacement property to acquire. Otherwise it’s like musical chairs, and when the music stops playing you better have a chair to land on to complete your exchange or you’re going to have to pay the capital gains taxes.
1031 Exchange Professionals
Contact our 1031 exchanges about your reverse exchange today. CPEC1031 has over twenty years of experience facilitating reverse 1031 exchanges across the country. Contact us at our Minneapolis office to learn more!
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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