Safe Harbor Reverse 1031 Tax Exchange

A Safe Harbor Reverse 1031 Tax Exchange accommodates temporarily holding the new property for the exchanger until the old property is sold. In 45 days of this arrangement, the exchanger must identify this new property as being the replacement 1031 Tax Exchange property. This is the safest way to structure a Reverse 1031 Tax Exchange because it is clear that the exchanger does not receive any property prior to completing the transaction.

Personal property may qualify for Like-kind Exchange treatment. Since personal property for real property cannot be exchange because personal property is not like-kind to real property. Like-kind property is more restrictive and much more narrowly defined for personal property than the like-kind property standard applied to real property.

Real or personal property sold is one state that may be exchanged for like-kind property located in another state. These provide both are located used within the United States of America (USA). Domestic property can not be exchanged as non-domestic property since they are not considered to be like-kind property to each other.

A reverse tax-deferred like-kind exchange provides the Investor with the flexibility to spend as much time as needed to locate a suitable like-kind replacement property, without the pressure of the forward tax-deferred like-kind exchange deadlines.

Reverse 1031 Exchanges are a class of 1031 exchange that allows the exchangor, the person who owns the property, to first purchase a new property to replace an existing property, before selling the existing property. This type of exchange, when properly executed, also defers capital gains taxes.

The investors will decide whether to park the replacement property or relinquished property with the Exchange Accommodation Titleholder. This will vary transaction to transaction and not all Qualified Intermediaries/Exchange Accommodation Titleholders will administer both structures. It depends on whether the lender will allow the Exchange Accommodation Titleholder to acquire and park title to the replacement property when the lender is also using the same property as collateral for the financing.