If the Taxpayer has found his or her replacement property and must close on it prior to the time that the relinquished property is ready to close, then the transaction becomes a "reverse exchange." The IRS requires that a reverse exchange use one of the two parking procedures below:

Type A: Relinquished Property Parked
Taxpayer acquires replacement property and conveys the relinquished property to the Exchange Accommodation Titleholder ("EAT"), using an exchange intermediary.
Type B: Replacement Property Parked
The EAT acquires the replacement property. The EAT may construct improvements on the property if needed. When the taxpayer's relinquished property is ready to close, then the taxpayer will exchange the relinquished property for the replacement property through an exchange intermediary.

Additional rules and considerations for reverse exchanges are discussed on pages 13 -15 of our brochure 1031 Exchanges in a Nutshell. Request Brochure (link to contact form)

A Ten Thirty-One Exchange Corp. 236 Montezuma Ave.
Santa Fe, NM 87501
505-982-1031 phone
505-982-5211 fax