reverse 1031 exchange: Reverse 1031 Exchange Activity Up Significantly - 02/07/14 07:25 AM
There have been numerous articles published in various media outlets over the past few calendar quarters discussing the fact that 1031 Exchange transaction volume is way up.  We have certainly experienced the same thing in our 1031 Exchange operation - 1031 Exchange volume has exploded over the last 12 months - and the trend line (pipeline) continues to look very strong indeed. 
Reverse 1031 Exchange Volume Significantly Up
An underlying trend that we noticed as we analyzed our 1031 Exchange transaction detail was that Reverse 1031 Exchange activity had not only increased as well, but had increased significantly more than regular Forward 1031 … (1 comments)

reverse 1031 exchange: Increase in Reverse Exchanges: Bottom Feeders Are Jumping In Using Reverse Exchanges - 06/22/08 07:24 PM
We have seen the beginnings of an interesting trend in our current market cycle that involves reverse exchange transactions.  The real estate bottom feeders are beginning to jump in and search for investment opportunities, which means the creative transactions are right around the corner.  However, we have seen an interesting trend that I thought we would share with you.
Increase in Reverse Exchange Transactions  
We've seen a marked increase in the number of phone calls, emails and internet questions asking about reverse exchange structures and procedures, and we have seen an increase in the actual number of reverse exchange transactions that we … (4 comments)

reverse 1031 exchange: Non-Safe-Harbor Reverse Exchange Strategy Continued ...... - 06/07/08 04:58 PM
I addressed safe harbor reverse exchange structures in my last blog post.  I will go into more detail as to how a non-safe-harbor reverse exchange might be structured in today's market.
Deciding On Reverse Exchange Structure
Reverse exchanges structured pursuant to Rev. Proc. 2000-37 must be structured differently from those that are structured using a non-safe-harbor reverse exchagne structure.  You must decide up front if you will be able to follow the safe harbor guidelines or if you will most likely not be able to stay within the 180 calendar day deadline and will need to proceed with a non-safe-harbor reverse exchange. 
… (0 comments)

reverse 1031 exchange: The Safe Harbor Reverse Exchange - 05/31/08 06:57 PM
I addressed the issue of whether a true reverse exchange would qualify for tax-deferred exchange treatment in my blog post from yesterday.  I discussed the fact that a true reverse exchange does not exist, but that a reverse exchange can be structured. 
Reverse Exchange Pursuant to Revenue Procedure 2000-37
The IRS issued Revenue Procedure 2000-37 that allows a real estate investor to structure a parking arrangement whereby an Exchange Accommodation Titleholder can acquire and hold or "park" title to either the the real estate investor's relinquished property or replacement property in order to buy enough time to sell the existing relinquished property … (2 comments)

reverse 1031 exchange: Why Would You Use a Reverse 1031 Exchange? - 05/31/08 02:31 PM
The real estate market has changed considerably over the last few years, even the last few months, with the residential real property market getting especially hit hard.  And, with the commercial real estate market beginning to show signs of weakness, the investor must rethink his or her strategy when it comes to investing in rental properties or investment properties. 
The amount of real property inventory on the market has increased significantly because properties are taking much longer to sell.  There has also been a significant increase in the number of foreclosure, deed-in-lieu of foreclosure and short sale transactions with bankrupcties right … (0 comments)

reverse 1031 exchange: Does a True Reverse Exchange Qualify? - 05/31/08 01:53 PM
First, what is a "true reverse exchange?" 
Reverse Exchange
The reverse exchange allows a real estate investor to acquire his or her like-kind replacement property first and then subsequently dispose of (sell) his or her relinquished property later provided he or she comply with the specific 1031 exchange deadlines. 
True Reverse Exchange
A true reverse exchange refers to a transaction that is structured such that the real estate investor would acquire and actually take title to the desired like-kind replacement property.  This would result in the real estate investor owning both the relinquished property that has not been sold yet at … (0 comments)

reverse 1031 exchange: Increase in Reverse 1031 Exchange Activity - 05/04/08 05:57 AM
We expected to see a drop in reverse 1031 exchange activity during this real estate market downturn, but we were surprised to actually experience an increase in reverse 1031 exchange transaction volume.
Sale and Purchase Scheduled to Close Concurrently
What we found is that investors were putting both properties under contract.  They were putting their relinquished properties under contract and contracting for their like-kind replacement properties that they intend to acquire as part of their 1031 exchange transaction.  Their intention of course was to close both properties as close together as possible (note: you must close on your relinquished property first unless you wish to … (6 comments)

reverse 1031 exchange: REVERSE 1031 Exchange Series: Post No. 13 - 02/04/08 04:33 PM
There are certain pre-reverse 1031 exchange planning issues that should be anticipated to make the planning process go smoother.  The pre-planning will vary from transaction to transaction depending upon the circumstances, but here are some items that you might expect. 
Pre-Exchange Due Diligence
Before setting up a reverse tax-deferred like-kind exchange, the Exchange Accommodation Titleholder will require the Investor to provide the following documents and information:
Some EATs/QIs will required the Investor to submit Financial statements and/or Federal income tax returns for the last two or three income tax years in order to demonstrate financial abiity to indemnify the EAT/QI from potential liability; A … (0 comments)

reverse 1031 exchange: REVERSE 1031 Exchange Series: Post No. 12 - 02/02/08 04:45 PM
Issues with Reverse Tax-Deferred Like-Kind Exchanges
The costs surrounding reverse tax-deferred like-kind exchanges are considerably more than those for a forward tax-deferred like-kind exchange transaction.
Fees for reverse tax-deferred like-kind exchange transactions are higher than fees for forward, delayed tax-deferred like-kind exchange transactions primarily due to the significantly increased risk that is assumed by the Exchange Accommodation Titleholder (EAT) when acquiring, holding and "parking" legal title to the Investor's relinquished or replacement property.
The Investor will also incur additional title insurance, environmental, loan, legal, property, casualty and liability insurance, and escrow/closing costs depending on the structure of the reverse tax-deferred like-kind exchange.
There is … (4 comments)

reverse 1031 exchange: REVERSE 1031 Exchange Series: Post No. 11 - 02/02/08 12:46 PM
Issues with Exchange Last Parking Structure
Cash Boot Potential: If the amount of the down payment advanced by the Investor to the Exchange Accommodator Titleholder (initial equity) used to acquire the like-kind replacement property is less than the equity generated from the sale of the relinquished property the Investor may have accidentally created cash boot and will recognize depreciation recapture and/or capital gain income tax liabilities to the extent of the cash boot. (Note: To qualify for 100% tax-deferral in a tax-deferred like-kind exchange, the equity in the like-kind replacement property must be equal to or greater than the equity in the … (0 comments)

reverse 1031 exchange: REVERSE 1031 Exchange Series: Post No. 10 - 02/02/08 12:44 PM
Exchange First Parking Structure - Parking Title to Relinquished Property
In an Exchange First parking structure the relinquished property is acquired, held or parked by the Exchange Accommodation Titleholder and a simultaneous or concurrent tax-deferred like-kind exchange transaction is completed by selling (transferring or conveying) the relinquished property to the Exchange Accommodation Titleholder and simultaneously acquiring and closing on the like-kind replacement property.
The relinquished property may not be transferred to a disqualified entity such as a related party of the Investor or to an agent of the Investor. When you find a buyer for the parked relinquished property, the Exchange Accommodation Titleholder … (0 comments)

reverse 1031 exchange: REVERSE 1031 Exchange Series: Post No. 10 - 02/02/08 12:43 PM
Exchange First Parking Structure - Parking Title to Relinquished Property
In an Exchange First parking structure the relinquished property is acquired, held or parked by the Exchange Accommodation Titleholder and a simultaneous or concurrent tax-deferred like-kind exchange transaction is completed by selling (transferring or conveying) the relinquished property to the Exchange Accommodation Titleholder and simultaneously acquiring and closing on the like-kind replacement property.
The relinquished property may not be transferred to a disqualified entity such as a related party of the Investor or to an agent of the Investor. When you find a buyer for the parked relinquished property, the Exchange Accommodation Titleholder … (0 comments)

reverse 1031 exchange: REVERSE 1031 Exchange Series: Post No. 9 - 02/02/08 12:41 PM
This post will delve much deeper into the Exchange Last parking structure.   
Exchange Last Parking Structure - Parking Title to the Replacement Property
The preferred reverse tax-deferred like-kind exchange strategy is the Exchange Last Structure where the Exchange Accommodation Titleholder acquires and parks title to the replacement property.
This structure provides the Investor with a great deal more flexibility in planning the acquisition and financing of the like-kind replacement property because the actual tax-deferred like-kind exchange has not yet occurred.  We do not care at this point if the Investor has exchanged or traded equal or up in value, has reinvested his equity (cash) … (4 comments)

reverse 1031 exchange: REVERSE 1031 Exchange Series: Post No. 8 - 02/02/08 12:27 PM
Reverse Tax-Deferred Like-Kind Exchange Structures
I have addressed the two reverse 1031 exchange structures in my prior posts. Investors must decide whether to park the replacement property or relinquished property with the Exchange Accommodation Titleholder.  This decision will vary from transaction to transaction and not all Qualified Intermediaries/Exchange Accommodation Titleholders will administer both structures. 
It will typically depend on whether the lender will allow the Exchange Accommodation Titleholder to acquire and park title to the replacement property when the lender is also using the same property as collateral for the financing.
There are other factors that may play a role in determining which property … (0 comments)

reverse 1031 exchange: REVERSE 1031 Exchange Series: Post No. 7 - 02/02/08 12:21 PM
Reverse 1031 Exchange Structures
As I previously discussed in post number 6, the challenge in structuring your Reverse 1031 Exchange is deciding which property will be acquired and held or "parked" by the Exchange Accommodation Titleholder ("EAT").  The structure selected by you will depend on whether there is financing involved and which property your lender will allow Exeter Reverse 1031 Exchange Services, LLC to acquire and hold or park title to.
The two structures are commonly referred to as Exchange Last and Exchange First because the simultaneous 1031 exchange occurs either at the beginning (Exchange First) or at the end (Exchange Last) … (0 comments)

reverse 1031 exchange: REVERSE 1031 Exchange Series: Post No. 6 - 01/06/08 09:38 AM
I discussed the two different reverse 1031 exchange structures in Post No. 5 of this series on reverse 1031 exchange transaction strategies. 
I received a number of emails from ACTIVE RAIN members shortly after the last post asking when each structure would be used, and these questions are a perfect segway into the next planned subject post: financing issues involved with reverse 1031 exchange transactions.  However, before we delve deeper into the financing issues involved with reverse 1031 exchanges we must first decide which property we will park as part of the reverse 1031 exchange transaction. 
Recap of Reverse 1031 Exchange … (4 comments)

reverse 1031 exchange: REVERSE 1031 Exchange Series: Post No. 5 - 01/02/08 08:37 AM
We've laid out the when and why in the first four posts in this series, so let's now get into the how to structure a reverse 1031 exchange transaction.
Reverse 1031 Exchange Structures
The challenge in structuring a reverse 1031 exchange is deciding which property will be acquired and held or "parked" by the Exchange Accommodation Titleholder ("EAT").  The structure selected by you will depend on whether there is financing involved and which property your lender will allow Exeter Reverse 1031 Exchange Services, LLC as your Exchange Accommodation Titleholder to hold or park title to.
The two structures are commonly referred to as Exchange Last … (0 comments)

reverse 1031 exchange: REVERSE 1031 Exchange Series: Post No. 4 - 01/01/08 11:42 AM
I started out discussing why you would use a reverse 1031 exchange, including the situations where we see reverse 1031 exchanges used the most often and then addressed some of the ways that reverse 1031 exchanges can reduce risks when using 1031 exchanges.
Overview of Reverse 1031 Exchanges
This post will provide you with a very brief and concise overview of reverse 1031 exchange transactions.  You can learn more about reverse 1031 exchange transactions by reading our in depth article entitled Introduction to Reverse 1031 Exchanges, which includes more information on reverse 1031 exchange structures, strategies and compliance issues.
Legal Disclosure  
You know there … (0 comments)

reverse 1031 exchange: REVERSE 1031 Exchange Series: Post No. 3 - 12/30/07 07:03 PM
I was discussing the reasons that you might need or choose to structure a reverse 1031 exchange in my last post (Post No. 2 in this Series).  Let's discuss how it can also help reduce your risk in completing a 1031 exchange transaction. 
It Can Also Reduce Your Risk
Regardless of your reason for selecting and utilizing a reverse 1031 exchange, you can reduce your risk by using the reverse 1031 exchange because you will acquire your like-kind replacement property first, and then you have 45 calendar days to identify which relinquished property you intend to sell, and you have another 135 … (0 comments)

reverse 1031 exchange: REVERSE 1031 Exchange Series: Post No. 2 - 12/30/07 02:34 PM
The first thing that we should probably address when beginning a discussion of reverse 1031 exchange transactions is why an investor would want to use a reverse 1031 exchange.  They are more sophisticated, complicated, and expensive than a traditional or regular forward 1031 exchange transaction after all, so why should we even both with them. 
Why Would You Use a Reverse 1031 Exchange? 
The real estate market has changed considerably over the last few years, especially the residential real property market.  The amount of real property inventory on the market has increased significantly because properties are taking much longer to sell.  … (2 comments)