About Reverse Exchange
Because of favorable tax law changes, Reverse Exchanges have become commonplace over the last few years; they can provide great opportunities and advantages in managing your real or personal property investments.
As the name suggests, the Reverse Exchange works through the “exchange”of property; what makes it a "reverse" is that it allows you to purchase new investment property first, then sell your existing investment.
Effective September 15, 2000, the IRS issued its Revenue Procedure 2000-37. With this law, for the first time, the IRS sanctioned the Reverse Exchange with the "safe harbor" rule. Essentially, the IRS has approved a parking arrangement. If a real estate seller cannot sell their property in a timely enough fashion to perform a standard 1031 Exchange, they can now use a Qualified Intermediary to hold title on the property they wish to acquire.