A reverse exchange is a 1031 exchange in which you acquire your replacement property first and then sell the relinquished property second.
Why would you want to make your 1031 exchange more complicated by buying first and selling second? Why not just do a standard forward exchange?
One word: certainty.
A reverse exchange provides a level of certainty that’s absent from a typical forward exchange.
There is a lot of risk when you sell your relinquished property in a 1031 exchange and then have only 45 days to identify in writing what you want to acquire and 180 days to close on it. If you’re not prepared, you’ll be running around like a chicken with its head cut off trying to find replacement property. But if you think ahead like a chess player, you may want to lock down a replacement property by acquiring it through a qualified intermediary and have them hold it for up to 180 days under the reverse exchange safe harbor.
MN 1031 Intermediaries
At CPEC1031, LLC our Minnesota 1031 intermediaries are here to help you through the specifics of your next like-kind exchange under section 1031 of the Internal Revenue Code. We have more than twenty years of experience facilitating like-kind exchanges across the United States and are well-equipped to help you manage all the details of your next exchange. Contact us at our Twin Cities office today to learn more about the 1031 exchange process and see if you are a good candidate for capital gains tax deferral under section 1031.
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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