Keeping Reverse 1031 Exchanges Simple

Rapidly Changing Investment Marketplace 

The investment property market continues to evolve creating numerous investment opportunities for the real estate investor.  Real estate investors must move quickly though in order to take advantage of the investment opportunities as they present themselves.

Real estate investors attempting to sell existing properties and structure a 1031 Exchange must be careful when including contingencies in their offers and counter offers for the purchase of their replacement properties.  Sellers are not usually willing to wait when there are other interested investors, and contingencies may scare off the seller.

Reverse 1031 Exchanges 

Reverse Exchanges may be the tax-deferred exchange strategy real estate investors need when they must respond quickly in investment property markets like today.

The real estate investors can acquire their replacement investment property prior to selling their existing relinquished real property.  The investor doesn't have to wait until their relinquished property sale transaction closes. Investors can take advantage of investment opportunities as they come up. They can acquire the identified replacement property before selling their relinquished property, and then focus on marketing the current relinquished investment properties later.

Investors and their advisors should note that Reverse Exchanges are significantly more complicated and expensive than traditional forward or delayed 1031 Exchanges.  However, they can be an incredible tax-deferred exchange strategy for real estate markets just like today, not to mention that the Reverse Exchange takes much of the risk and stress out of the 45 calendar day identification requirements.