Discussion:1031 exchange question
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Discussion Forum Index --> Tax Questions --> 1031 exchange question
| 18 June 2007 | |
| I have never had this question asked but I have a client that is wanting to purchase some land. He has other land he is wanting to sell and has considered the 1031 exchange as his best option however the land he is wanting to purchase has an owner that is in a big hurry to sell due to needing the cash for another deal.
My question being is there anyway he can do a 1031 exchange if he purchases the land first, not sure how long it will take him to sell his land. I have never been asked this and have not had time to research it today and he is very "ancy" to say the least. Thanks for any help on quick notice | |
| June 18, 2007 | |
| Yes, it's called a Reverse Exchange. Be careful! The 180 day rule still applies. Do a search in TA to learn more. | |
| 18 June 2007 | |
| Consider calling Downstream Exchange, 800-743-1031. You will need an exchange facilitator anyway. I have worked with them on a small exchange, one technically complicated exchange, and one very large transaction. I highly recommend them. The president is also a CPA with a tax practice, so he knows what he is doing. There are lots of exchange facilitators if you feel that you need someone local, many of which are a great resource since they do this stuff all the time. | |
Sherman1031 (talk|edits) said: | 20 June 2007 |
| The tricky thing with reverse exchanges can be the financing. You will want to make sure that your client either a) has the cash to fund the purchase or b) is working with a lender that understands reverse 1031 exchanges and the financing issues they create. I won't post them here but I would be happy to talk with you further if you need a couple of reference sources for lenders to work with on the financing piece.
Also, I would check around on the reverse fees. They can vary by the thousands. Many start at $5,000 or more to do a reverse but there are a few very well respected companies that do them for as little as $2,000. Check around, you could save thousands on this. Also, keep in mind that the 180 days is simply a guideline to stay within the safe harbor. If your client is confident he can complete the exchange within 180 days great. Otherwise, you would be wise to set up a non-safe harbour exchange up front. The costs can be dramatically different but the layers of protection may be worth it to your client - especially on land that may take an extended period of time to sell. | |
