Reverse 1031 exchange
A reverse 1031 exchange, which is sometimes referred to as a "parking arrangement," occurs when a taxpayer acquires a Replacement Property prior to disposing of their Relinquished Property. A pure reverse exchange, where the taxpayer owns both the Relinquished and Replacement properties at the same time, is not allowed. The actual acquisition of the "parked" property is done by an Exchange Accommodation Titleholder or parking entity.
In a typical 1031 Reverse Exchange, the "Exchange Accommodation Titleholder" takes title to or "parks" the replacement property and holds it until the taxpayer is able to sell the relinquished property. The taxpayer then exchanges with the Exchange Accommodation Titleholder, who now owns the replacement property. An exchange structured within the safe harbor of Rev. Proc. 2000-37 cannot have a parking period that goes beyond 180 days.
Click here to learn more about 1031 Tax Exchange.
Also visit these links for additional resources:
- 1031 Exchange Basics
- 1031 Exchange Underused Tax Planning Tool
- 1031 Do´s and Don´ts
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Form 8824 - Like-Kind Exchanges (PDF)
- Publication 544 - Sales and Other Dispositions of Assets
- 1031 Exchange in Florida - Florida state 1031 exchange information page
- History of the 1031 Exchange
- Identifying replacement property
- Like kind property exchanges
- Tax Deferred IRS Guidelines
- How to initiate a Build to Suit Exchange?
- Build-To-Suit 1031 Exchange
- Reverse 1031 Exchange
- Starker Vs. United States