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Baltimore
City -
Canton
Fells Point
Federal Hill
Baltimore
City N. -
Roland Park
Guilford
Homeland
Baltimore County -
Ruxton
Cockeysville
Lutherville
Hunt Valley
Greenspring Valley |
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Do a Reverse Exchange
"You can purchase the replacement
property first"
"New
Reverse Exchange Safe Harbor Finalized?
A reverse exchange occurs when the replacement
(purchase) property is acquired prior to closing
on the relinquished (sale) property. Exchangers
nationwide can now confidently proceed with a
"reverse exchange" that adheres to the
Revenue Procedure 2000-37 released on September
15, 2000. The new safe harbor offers welcome clarification
and will make the reverse a more popular and accepted
exchange variation!
Highlights
of the Reverse Guidelines
The Accommodation Titleholder, through a "qualified
exchange accommodation arrangement" (QEAA),
may hold title to either the relinquished or
replacement property
The Exchanger must have the requisite intent
that the purchase of the replacement property
be part of an exchange.
Within 45 days of purchasing the replacement
property, the Exchanger must "identify"
(subject to the rules in the ?1031 tax code)
the relinquished property to be sold in the
exchange.
The reverse exchange must be completed within
180 calendar days.
The Exchanger may loan or advance funds to the
Intermediary for the purchase of the replacement
property.
The Exchanger may supervises improvements,
act as a contractor or assume other management
functions.
Additional
Issues
If financing is involved, the lender should
be consulted since the Intermediary must hold
title to property.
The Exchanger may enter into a lease or management
agreement with the Intermediary.
The reverse exchange may be combined with
an "Improvement Exchange" to allow for
additional construction improvements. However,
the 180-day time limit will apply.
Reverse exchanges utilizing a "parking
arrangement" outside this procedure may
still be able to qualify for tax deferral.
It is critical to thoroughly scrutinize the
way (such as a separate LLC for each Exchanger)
the Intermediary holds title to property.
Information
Provided by
Asset Preservation,
Inc.
National Headquarters: 800-282-1031 or
info@apiexchange.com
This information is not intended
to replace qualified legal and/or tax advisors.
Every taxpayer should review their specific transaction
with their own legal and/or tax counsel.
© 2000 Asset Preservation, Inc. |
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