In a reverse 1031 exchange, you acquire your replacement property first and park with an Exchange Accommodation Titleholder owned by your 1031 exchange company.
When the EAT (Exchange Accommodation Titleholder) that’s owned by the 1031 exchange company buys the replacement property, the exchange company doesn’t want to have anything to do with the property other than holding the bare legal title.
In order to fulfill the responsibilities of ownership, the exchange company often enters into a Triple Net Lease (or management agreement) wherein they lease the property to the taxpayer conducting the exchange for a nominal amount for the length of the exchange period (180 days). Through that master lease, the 1031 exchange taxpayer then controls the property. That means the 1031 taxpayer is also responsible for the taxes, debt service, insurance, and caring costs associated with the property throughout the 1031 exchange process.
Like-Kind Exchange Services
At CPEC1031, LLC we offer like-kind exchange services to taxpayers who own property throughout the United States. No matter where your property is located, we can help you defer your capital gains tax burden when selling qualifying real estate. Reach out to the skilled 1031 intermediaries at CPEC1031, LLC today to discuss the details of your exchange and make sure you are able to defer 100% of your capital gains taxes. You can contact us at our Minneapolis office to set up a time to speak.
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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