This is where the reverse 1031 exchange can come into play.
In a reverse 1031 exchange, the exchange or closes on their replacement property before completing the sale of their old relinquished property. The reverse 1031 exchange is a little known trick that can be incredibly helpful in an exchange, but it comes with some added complexity, and some added risk.
There are essentially 2 ways to structure a reverse 1031 exchange. A front-leg reverse exchange and a back-leg reverse exchange.
In both situations an “exchange accommodation title holder” acquires property on your behalf, essentially “parking” the property for you. Typically a qualified intermediary (QI) acts as the accommodation title holder, and the investor usually needs to come up with the money for the Q.I. to purchase the property – often times in the form of a bridge loan, or cash.
Sound tricky? It can be. It is best to rely on the experts if you intend to complete a reverse 1031 exchange.
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