A Reverse Exchange allows the tax payer to structure a 1031 exchange when it is necessary to purchase the replacement property prior to selling the relinquished property.

Any real estate held as investment or for business use.  Oil and gas minerals are also considered like-kind property.  Additionally, funds received for pipeline damages, pad site construction, etc may be considered like-kind.  Each of the aforementioned assets can be interchanged.  For example, O&G mineral interest can be sold and exchanged for income producing real estate.  If you’re unsure if your property qualifies please give us a call.

In a forward exchange the tax payer is provided 45 days from the closing date of the relinquished property to identify property/properties they are interested in purchasing.  The tax payer then has 180 days from the initial closing date to complete the purchase of the replacement property.

Yes and No.  To gain the full tax benefit, the entire sale proceeds must be used to purchase new property.  Any sale proceeds not used to purchase replacement property are considered “boot” and subject to capital gains tax.  However, there are solutions to avoid this scenario.