Reverse Exchange

The reverse exchange is the most complicated type of exchange, where the investor-owner acquires the replacement property first, has 45 days to identify the relinquished property and must complete the sale of the relinquished property within the 180 day timeline. The investor-owner is prohibited from owning both the replacement property and relinquished property simultaneously. The IRS allows an Exchange Accommodation Titleholder (EAT) to enter the relinquished or replacement property to meet this requirement. Whether the replacement property or the relinquished property is parked it must be held by the EAT for federal income tax purposes. Financing to acquire the replacement property is always a critical issue with a reverse exchange. These types of exchanges are highly technical and require consultation with the investor-owner’s accountant or tax attorney.

Next: Learn About Personal Property Exchanges
Reverse Exchange

Reverse Exchange

The reverse exchange is the most complicated type of exchange, where the investor-owner acquires the replacement property first, has 45 days to identify the relinquished property and must complete the sale of the relinquished property within the 180 day timeline. The investor-owner is prohibited from owning both the replacement property and relinquished property simultaneously. The IRS allows an Exchange Accommodation Titleholder (EAT) to enter the relinquished or replacement property to meet this requirement. Whether the replacement property or the relinquished property is parked it must be held by the EAT for federal income tax purposes. Financing to acquire the replacement property is always a critical issue with a reverse exchange. These types of exchanges are highly technical and require consultation with the investor-owner’s accountant or tax attorney.

Next: Learn About Personal Property Exchanges