Reverse 1031 exchange
A 1031 exchange where the replacement property gets bought before the relinquished property sells. Harder to structure and more expensive than a standard exchange. Uses an exchange accommodation titleholder.
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Part 1 of 4
Why a seller cares
A reverse exchange buys the replacement before the old property sells, which is useful when the right building comes up first. It takes an accommodation titleholder, more cost, and the same 180-day clock.
Part 2 of 4
A simple example
You find a replacement building before your rental sells. An exchange accommodation titleholder takes title to it, and your rental has to close within 180 days.
| The step | In a reverse exchange |
|---|---|
| Buying the replacement | Parked with an accommodation titleholder, not in your name |
| Selling the old property | Within 180 days of the parking |
| Cost | Higher; a second entity and more paperwork |
A reverse exchange runs the 1031 backwards, with a placeholder owner in the middle.
Part 3 of 4
What people get wrong
That buying first disqualifies the exchange. It complicates it; the reverse structure exists to allow it.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
In your Room, this word explains itself where it appears.
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