Reverse 1031 Exchange Services
Don't miss out on the perfect property. Buy your replacement property first, then sell your existing property within 180 days with complete tax deferral.
Why Choose a Reverse Exchange?
Secure Your Ideal Property
In competitive markets, the perfect replacement property won't wait. Lock it in immediately while you market your current property at the best price.
Maximize Sale Price
Without pressure to sell quickly, you can wait for the right buyer and optimal market conditions to maximize your property's value.
Eliminate Timing Risk
No more stress about finding a replacement property in 45 days. You've already secured your next investment before starting the exchange.
How Reverse Exchanges Work
Exchange Accommodation Titleholder (EAT)
In a reverse exchange, an Exchange Accommodation Titleholder temporarily holds title to either your new or old property. This allows you to "buy before you sell" while still qualifying for 1031 tax deferral.
Find Your Ideal Replacement Property
When you find the perfect property, contact National 1031 Center immediately. We'll set up the reverse exchange structure before you sign the purchase agreement.
Tip: Contact us as soon as you're serious about a property. Setting up a reverse exchange takes additional time.
EAT Takes Title
Our Exchange Accommodation Titleholder (EAT) entity purchases your replacement property. You provide the down payment and arrange financing, but the EAT holds legal title.
- You maintain full control and use of property
- Triple-net lease gives you all benefits
- Financing in EAT's name with your guarantee
45-Day Identification
Within 45 days of the EAT purchasing your replacement property, you must identify which property you'll be selling. Most reverse exchanges involve just one property to sell.
Market and Sell Your Property
List your relinquished property at the optimal price. You have up to 180 days from the replacement purchase to complete the sale. No rush means better negotiating position.
Complete the Exchange
When your property sells, proceeds go to the QI. The EAT transfers the replacement property to you, completing the exchange with full tax deferral.
Two Reverse Exchange Structures
Exchange First Structure
Most Common
EAT purchases and holds your replacement property while you sell your existing property.
Best When:
- • You need financing for the new property
- • The new property is readily available
- • You want to start improvements immediately
Process:
- 1. EAT buys replacement property
- 2. You lease property from EAT
- 3. You sell relinquished property
- 4. EAT transfers replacement to you
Exchange Last Structure
Alternative Option
EAT takes title to your existing property, allowing you to purchase the replacement directly.
Best When:
- • You have cash to buy replacement
- • Lender prefers you on title
- • Existing property is easy to sell
Process:
- 1. You transfer relinquished to EAT
- 2. You buy replacement property
- 3. EAT sells relinquished property
- 4. Proceeds pay down your loan
Reverse Exchange Timeline
EAT Purchase
Clock starts
ID Property
To sell
Sale Deadline
Must close
Same strict deadlines apply! 45 days to identify property to sell, 180 days to complete the sale. No extensions for any reason.
Perfect for These Situations
Hot Seller's Markets
When inventory is low and properties sell quickly, secure your replacement before listing your current property.
Unique Properties
When you find a one-of-a-kind investment opportunity that won't last, lock it in without selling first.
New Construction
Start building your replacement property immediately while taking time to properly market your existing property.
Auction Properties
Win competitive auctions with confidence, knowing you have time to sell your property at full value.
Strategic Relocation
Moving investments to a new market? Establish your position first, then exit your current market on your terms.
Partnership Buyouts
Acquiring a partner's interest? Use reverse exchange to complete the buyout while arranging your property sale.
Investment Requirements
Reverse Exchange Costs
Cost vs. Benefit: While reverse exchanges cost more than delayed exchanges, the ability to secure ideal properties and maximize sale prices often results in profits that far exceed the additional fees.
Financing Considerations
- Most lenders work with reverse exchanges but may require additional documentation
- You'll need down payment funds available before selling
- Bridge financing may be needed if selling property has low debt
Reverse Exchange FAQs
How long can the EAT hold my property?
The EAT can hold property for up to 180 days under safe harbor rules. Extensions may be possible but aren't guaranteed and could risk the exchange qualification.
Who manages the replacement property during the exchange?
You do! Through a triple-net lease agreement, you have full control and responsibility for the property, including collecting rents, paying expenses, and managing operations.
What if my property doesn't sell within 180 days?
The exchange would fail and you'd own both properties. You might owe taxes on a deemed sale to the EAT. That's why pricing your property correctly from the start is crucial.
Can I do improvements during a reverse exchange?
Yes! You can improve the replacement property while the EAT holds title. This combines benefits of both reverse and improvement exchanges, though complexity and costs increase.
Do all lenders work with reverse exchanges?
Most commercial lenders are familiar with reverse exchanges. Some may require the loan to be in your name with the EAT on title, while others will lend directly to the EAT. We work with lenders regularly to ensure smooth transactions.
Don't Let the Perfect Property Slip Away
Our reverse exchange experts will help you secure your ideal investment while maximizing your sale price.
Why Choose National 1031 Center?
Time-sensitive opportunity? Call now: (877) 483-0427