Buying the Replacement Property then Selling                                                      the Relinquished Property

With the new IRS regulations in effect, the Reverse Exchange is made a less risky type of transaction.

The new IRS changes have also made the Reverse Exchange less flexible than in the past.

There is now less time to complete a Reverse Exchange  (180 days when it previously used to be a year or more ).

The title to the property needs to be held by a qualified intermediary (on the buy or sell side) and the qualified intermediary needs to depreciate the property.

This of course increases the reporting requirements, which of course will increase your costs.

Because of the risk involved you can motivate the seller to negotiate the deal to be a regular exchange:

You can make the purchase contingent on the sale of  your relinquished property, this may be difficult in a sellers market.

You close the purchase a little later.

You can increase the earnest money deposit on the property.

You can make some or all of the earnest money deposit nonrefundable.

You can raise the purchase price.

You can lower the listed price.

You can agree to the terms of the existing offer.

       Reverse Exchange

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             Real Estate Exchanging

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