What Is a Reverse 1031 Exchange?

1031 Exchange Services

We have spent over 20 years facilitating exchanges for investors across the country. We see this situation all the time: You find an amazing opportunity on a property that just hit the market. You need to close on this new deal immediately. However, your current property is listed but hasn’t sold fast enough to keep up.

You do not have to let that deal slip away. A reverse 1031 exchange allows you to acquire your replacement property first and sell your old one later. We help clients with this all the time. This strategy provides incredible flexibility and eliminates the stress of the 45-day identification clock. Because we do this every day, we know exactly how to structure the transaction to keep you IRS-compliant while you secure your next big asset.

Key Requirements for a Successful Reverse Exchange

A reverse 1031 exchange is more complex than a standard one, but we handle the heavy lifting for you.

• The EAT & QEAA Structure: To follow IRS rules, you cannot own both properties at once. Therefore, we use an Exchange Accommodation Titleholder (EAT) to “park” the title of your new property. We formalize this with a Qualified Exchange Accommodation Agreement (QEAA).
• Guaranteed Financing: You must have the funds or financing ready to buy the new property now. We coordinate directly with your lenders to ensure they are comfortable with the EAT-held structure.
• Expert Guidance: Our team at 1031 Federal Exchange works with your attorneys and title companies. We ensure every piece of documentation supports full tax deferral under IRS Code Section 1031.

The Reverse Exchange Process Flow

We guide you through these four critical steps to ensure your equity stays protected.

1. Purchase the New Property: We help you acquire the replacement property first. The title is “parked” under our EAT LLC to keep your exchange valid.
2. Execute the QEAA: We finalize the legal agreement that establishes the reverse structure and starts your official 180-day clock.
3. Sell Your Old Property: You now have 180 days to close the sale of your relinquished property. This removes the “identification pressure” common in forward exchanges.
4. Finalize and Reinvest: Once your old property sells, we use those proceeds to “reimburse” the acquisition costs, officially completing your tax-deferred transaction.

Why Investors Choose a Reverse Exchange

• Lock in High-Demand Assets: Buy the property you want today before a competitor beats you to it.
• Kill the 45-Day Stress: Since you bought the new property first, the identification window is effectively solved from Day 1.
• Maximized Planning: You gain the flexibility to wait for the best offer on your old property rather than rushing a sale.