Reverse like-kind exchanges achieve the same ultimate goal as a forward exchange, but the process is significantly different. Learn more about reverse exchanges here, and contact our New York qualified intermediaries today to get answers to all of your 1031 exchange questions –877.373.1031.
Reverse Like-Kind Exchanges in New York
Reverse 1031 exchanges differ from the typical forward exchanges because they essentially work backwards, while achieving the same end result (tax deferral). A reverse exchange begins with the purchase of a replacement property, and ends with the sale of a relinquished property. This is the opposite of a forward exchange wherein the taxpayer first sells their relinquished property and then identifies and purchases the replacement property. But why would someone want to do things in reverse like this?
In a perfect world, you would be able to sell your relinquished property and find and close on the perfect replacement property within your 180 day exchange period. However, the world of commercial real estate doesn’t always work this way. Sometimes you find the perfect replacement property before you’ve put your relinquished property on the market. A reverse like-kind exchange allows you to lock in that property first so you don’t lose it to another buyer, and then later finish your exchange by selling your relinquished property. Say you are thinking about selling an apartment building in Brooklyn for another building in Manhattan. You haven’t put your Brooklyn building on the market yet, and you find the perfect building in Manhattan. Using a reverse exchange you can snatch up the Manhattan building, and then sell your Brooklyn building within the following 180 days and still qualify for 1031 treatment.
New York Reverse Exchange Services
There are a lot of nuances and complexities in a reverse exchange. As a result, it’s always a best practice to hire a qualified intermediary to help you through your like-kind exchange. Our New York 1031 intermediaries have decades of experience helping investors throughout New York city and state. Give us a call today to speak with a skilled and experienced New York 1031 exchange professional –877.373.1031.