Posted by Dave T on July 21, 2004 at 09:54:28:
Frank,
You are right. I did not look at the question closely enough. I should have caught the implication that Pat already owns the proposed “replacement” property which would disqualify a reverse exchange at this point.
1031 Question - Posted by Pat
Posted by Pat on July 18, 2004 at 23:00:31:
Is it possible to Buy my new property first and sell my old one for as 1031 exchange as long as the second property is the same price or higher than my selling price for the first one.
I know this is backwards and probably won’t work… but I just have to ask. I was originaly just going to flip this property, but I like it more than the one that I have had for 2 years. If I keep both, then I only have 4K in cash reserves.
Thanks again.
Pat
Reverse 1031 Exchange - Posted by William L. Exeter
Posted by William L. Exeter on August 08, 2004 at 23:26:10:
Yes, it is called a reverse 1031 exchange transaction. They are more complicated, and involve the Accommodator setting up a limited liability company to acquire and hold title on your behalf until you can sell your existing property. I would be happy to email an article to you if you would like.
Re: 1031 Question - Posted by Gary
Posted by Gary on July 26, 2004 at 09:13:06:
Hi, a reverse exchange is certainly legal. However, you really should ask your intermediary how much it will cost: the reverse exchange is generally much more expensive (maybe 3X). The reason is that the intermediary has to assume responsibility for the “new” property while you sell the “old” or relinguished one–they become, in a sense, the investor, with all the risk that entails. We have checked with many companies and they all charge a lot–so we never did it. Good luck whatever you decide. Gary
Re: 1031 Question - Posted by Frank Chin
Posted by Frank Chin on July 20, 2004 at 03:55:42:
Dave:
One way I read Pat’s post is he already owned both.
If he was in the process of buying “property B”, he can arrange for the “qualified intermediary” to buy it in his behalf and hold as trustee. He will then sell “property A”, the QI receives the funds, making the subsequent sale tax free.
If he’s still in the process of buying the second one, then he should see a 1031 expert right away.
Frank Chin
Re: 1031 Question - Posted by Dave T
Posted by Dave T on July 19, 2004 at 20:32:25:
Yes, you can. It is called a reverse exchange. There are 1031 exchange companies that can do this for you.
Re: 1031 Question - Posted by William L. Exeter
Posted by William L. Exeter on August 08, 2004 at 23:28:31:
Reverse 1031 Exchange fees vary from qualified intermediary to qualified intermediary. You can expect to pay any where from $4,000 to $7,000 for a standard reverse 1031 exchange.