Resource Library

The Reverse Exchange

In September of 2000, the IRS released new "safe harbor" guidelines for structuring reverse tax deferred exchanges of "like kind" real and personal property. A reverse exchange occurs when a taxpayer acquires a replacement property before disposing of their relinquished property. In other instances this may include build-to-suit property or property with construction needs. Compliance with the safe harbor guidelines creates a presumption that the transaction will qualify for §1031 tax-deferred exchange treatment.

A reverse exchange can give you "control" over the replacement property before you dispose of the relinquished property. This provides greatly expanded planning opportunities and avoids the time pressures inherent in the 45-day "identification" requirement intrinsic to regular deferred exchanges.