What is an SPE?
A Special Purpose Entity (“SPE”) is a separate legal entity created to qualify for business in the state in which the property is located. The SPE will only own one property during its life. The primary reason for having an SPE is to protect the property, and the transaction, from potential problems that could arise with another taxpayer’s transaction. In an “exchange first” reverse exchange, the SPE will purchase and park the Relinquished Property (and the Exchanger will have an immediate exchange), and then the SPE will sell the Relinquished Property to the ultimate third party buyer.In an “exchange last” reverse exchange, the SPE will purchase and park the Replacement Property, and then when the Exchanger is able to sell the Relinquished Property to the ultimate third-party buyer, the exchange will be completed when the Exchanger acquires the Replacement Property from the SPE.
A Special Purpose Entity (“SPE”) is a separate legal entity created to qualify for business in the state in which the property is located. The SPE will only own one property during its life. The primary reason for having an SPE is to protect the property, and the transaction, from potential problems that could arise with another taxpayer’s transaction.
