The Reverse 1031 Exchange

"Can I do a 1031 exchange for my property AFTER I've purchased a replacement property?"

Why, yes, yes you can.

It's called a Reverse 1031 or Reverse Starker, named after "Mr. Starker", the 1031 exchange pioneer.

By structuring a reverse section 1031 tax deferred, like-kind exchange transaction, you can acquire your like-kind replacement property before you sell your relinquished property. In reverse exchanges a third-party entity called an "Exchange Accomodation Titleholder" (EAT) acquires and holds legal title to the purchased property.

This procedure is especially helpful in hot markets where now you can breath a sigh of relief knowing that the exchange property is in good hands and won't slip away. The next step is to sell your first property all the while realizing that the replacement problem is solved.

You should always seek competent legal, financial and tax advice prior to entering into any 1031 tax-deferred, like-kind exchange.