1031 Exchange Help
Currently finishing up work on a property I am going to do a 1031 exchange with, but have already located a property that I want to purchase. This is my plan for a reverse 1031 exchange. Will you please let me know if I have the right sequence of events?
1. Put new property under contract as part of 1031 exchange.
2. Settle on new property as a new single member, LLC and designate current property as exchange property for 1031 within 45days of settlement.
3. Must settle on sale of current property within 180 days.
4. Then the profit from sale of current property can be transferred in to new property and ownership can be transferred from the LLC that was set up to buy the new property to the LLC that holds our long term rental properties.
Do these steps sound correct f(and make sense) for a reverse 1031 exchange?
I think you have your "hands on" the process so much that your approach will not be treated as a valid exchange.
Bill Exeter (wexeter) is an exchange specialist and would be able to address your questions. PM him or visit the website indicated in his profile.
In a reverse exchange, an independent, and unrelated, exchange accommodator takes title to your "replacement" property then transfers title to you when your relinquished property is sold within the next 180 days. The mechanics of funding the replacement property acquisition and cashing out the exchange accommodator are best addressed by a qualified intermediary.
Contact Mr. Exeter for specific details.