Reverse Exchanges Planning Points

1. Consult with your tax advisors prior to entering into a reverse exchange.

2. Instruct your attorney or real estate broker to insert a 1031 cooperation clause in the purchase and sale agreement. Contact us for sample cooperation language.

3. Select a Qualified Intermediary and send the purchase and sale agreement for the replacement property to the Qualified Intermediary at lease one week prior to the closing. The Qualified Intermediary should have the requisite knowledge and ability to facilitate a reverse exchange. The tax professionals at All States 1031 Exchange Facilitator have been at the forefront of structuring and implementing both safe harbor and non-safe harbor exchanges. The one week period will allow All States 1031 Exchange enough time to form the EAT, draft the appropriate documents, and discuss the mechanics of the exchange with your tax advisors, lender and the closing agent.

4. Pay attention to the 45/180 day deadlines as failure to observe these timeframes will invalidate a safe harbor reverse exchange. Legitimate Qualified Intermediaries will not backdate documents to accommodate late transactions.

5. To completely avoid tax on your exchange, you must apply all the equity from the property being sold to the purchase of the new property, and the new property must be of equal or greater value.

Call the knowledgeable exchange professionals at All States 1031 at
1-877-395-1031 for a complimentary consultation regarding your specific investment objectives.