A reverse exchange can be used when the taxpayer finds or must close on the replacement property prior to selling the relinquished property. The IRS issued favorable guidance on this type of technique with the release of Revenue Procedure 2000-37 in 2000. Under this guidance, an unrelated accommodation titleholder (AT) buys and holds title to the replacement property until the taxpayer is able to sell the relinquished property. While still governed by the 45-day and 180-day deadlines for all 1031 exchanges, a reverse exchange allows a taxpayer to take advantage of the marketplace conditions to acquire an attractive replacement property in advance of the sale or to overcome other timing issues.
ADE Holdings, LLC provides accommodation titleholder services for reverse exchange transactions. Our staff has participated in hundreds of reverse exchange transactions.