Net lease glossary
Reverse 1031 Exchange
A 1031 exchange where the replacement property is acquired before the relinquished property is sold, using an exchange accommodation titleholder.
In a reverse exchange, the investor buys the replacement property first. Because an investor cannot own both properties in the exchange simultaneously, an exchange accommodation titleholder takes title to one of them under a safe harbor in IRS Revenue Procedure 2000-37. The investor must then identify the property to be sold within 45 days and complete the exchange within 180 days. Reverse exchanges are more expensive and usually require the investor to fund the purchase without sale proceeds.