What is a Reverse Exchange?
Explore the strategy of using a Reverse 1031 Exchange, allowing you to purchase property first and sell later, effectively avoiding the loss of 35% of your profit to taxes.
Buy First, then Sell with a Reverse 1031 Exchange!
If you've found an excellent deal on a replacement property and the seller is eager to close quickly, a Reverse 1031 Exchange might be the ideal solution for you. With a Reverse 1031 Exchange, you have the flexibility to purchase and close on a replacement property before the relinquished property is sold or even under contract, as long as you adhere to the rules. The first rule is to establish the exchange BEFORE making the purchase.
Three Reverse 1031 Exchange Methods
These explanations are simplified, and it's crucial to be aware of potential pitfalls. For a comprehensive recommendation tailored to your specific situation, please reach out to the Reverse Exchange Department at Deferred or schedule a consultation.
All Cash Method
This method, as the name suggests, involves making the purchase with available cash. The funds for the purchase can come from refinancing or existing available cash.
Parking Method
With this method, the purchaser has the option to finance a replacement property with a traditional mortgage. In this case, the title of the Relinquished property is transferred to the Accommodator before the close of escrow on the replacement property, and once the Relinquished property is sold, the exchange is completed.
Reverse 1031 Exchange Financing
While challenging to locate, some lenders may occasionally offer financing for a Reverse 1031 Exchange. However, it's important to note that many lenders may not fully comprehend Reverse 1031 Exchanges, and if approved, they might entail higher interest rates.
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