Reverse 1031 Exchanges: Buy First, Sell Later

## Reverse 1031 Exchanges Explained In a traditional 1031 exchange, you sell first, then buy. But what if you find the perfect replacement property before selling your current one? That's where a **reverse exchange** comes in. ### How Reverse Exchanges Work 1. An Exchange Accommodation Titleholder (EAT) acquires and "parks" the replacement property 2. You have 180 days to sell your relinquished property 3. Once sold, the EAT transfers the replacement property to you 4. The exchange is complete, and capital gains are deferred ### When to Consider a Reverse Exchange - **Hot market conditions**: Your replacement property might sell to someone else - **Unique opportunity**: A rare property becomes available - **Strategic timing**: You need to close on the replacement before your sale ### Important Considerations #### Higher Costs Reverse exchanges are more complex and expensive than traditional exchanges. Expect additional fees for: - EAT holding costs - Additional legal documentation - Potential financing complications #### Financing Challenges Since the EAT technically owns the replacement property, traditional financing can be difficult. Many investors use: - Cash - Bridge loans - Portfolio lenders familiar with reverse exchanges #### The 45-Day Rule Still Applies You must identify your relinquished property (the one you'll sell) within 45 days of the EAT acquiring the replacement property. ### Is a Reverse Exchange Right for You? Reverse exchanges make sense when: - The replacement property opportunity is time-sensitive - You have the financial flexibility to handle higher costs - The tax savings justify the additional complexity **Considering a reverse exchange?** These transactions require experienced guidance. Contact Savvy 1031 to discuss your situation.