- 1031 exchanges let investors save up to 30% in capital gains tax on a sale by deferring the tax bill tax free onto another property within a six-month deadline.
- In a seller’s market, finding a buyer is pretty straightforward. It’s finding a good deal for your 1031 credit that becomes tricky—especially within the tight deadline.
- To get around that, so-called “reverse 1031” exchanges let buyers snag their replacement property before selling the old asset.
- In a reverse 1031, seller puts the funds from their sale directly into another building, rather than taking it in as income.
- Still under the radar for most investors, the reverse 1031 helps in a seller’s market, where high prices, tight lending guidelines and compressed cap rates make it tough to find a replacement.
- Reverses aren’t for everyone—they work best in the high-end market with big-name clients.
The Reverse Process
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