Reverse 1031 exchanges can be extremely beneficial for taxpayers who have a replacement property before they are able to sell their relinquished property. However, reverse exchanges are more intricate than standard forward exchanges and need to be treated with care.
Contact our Duluth reverse exchange professionals today to get started with your exchange – 218.831.1031.
What is a Duluth Reverse Exchange?
First thing’s first – what exactly is a reverse 1031 exchange and how does it differ from other types of exchanges? In most 1031 transactions, the taxpayer sells their old property first. Then sometime within the following 180 day time frame, the taxpayer purchases a new replacement property and rolls their net proceeds into that property. So for example, let’s say you have a property in Canal Park that you want to sell while avoiding the capital gains taxes. In a standard 1031 exchange, you could sell that property and roll all of your net proceeds into a replacement property in downtown Duluth. This allows you to defer your taxable gains and keep your money working for you.
In a reverse 1031 exchange, the order of operations is inverted, in that the taxpayer purchases their replacement property before closing on the sale of their relinquished property. Using our example, in a reverse exchange, the taxpayer would buy their new property in downtown Duluth, and then within the following 180 days, they would sell their old property in Canal Park. The biggest benefit doing a 1031 this way is that you get more flexibility if find a perfect replacement property before you’re able to sell your relinquished property.
Duluth Reverse 1031 Exchange Company
1031 exchanges sound easy but there are numerous documents, deadlines, and regulations you need to abide by to ensure a successful exchange. Going at it by yourself can spell disaster. It’s best to hire a qualified intermediary whose business it is to facilitate 1031 transactions.
Our Duluth third party administrators are available to help you get started with your reverse 1031 exchange. Give us a call today to get the ball rolling – 218.831.1031.