What is the IRSs Position on Reverse Real Estate Exchanges?
The IRS issued Revenue Procedure 2000-37 (Rev Proc) in September 2000 that gives taxpayers guidance on Reverse 1031 Exchanges. A Safe Harbor Reverse introduces a new entity into the reverse process-an Exchange Accommodation Titleholder (EAT). An EAT is a single member limited liability company (LLC) established by a Qualified Intermediary (QI) for use specifically in a reverse exchange. The EAT takes title to, or parks, a property for the taxpayer and holds it until the taxpayer is able to sell the old property. Rev Proc places a time restraint on the taxpayer-the EAT must convey the title on or before 180 days from the date of the EATs purchase. When the EAT parks the new property, Rev Proc requires the taxpayer to identify their old property on or before 45 days from the EATs purchase. Our reverse exchange specialists will guide you through this process. Rev Proc also refers to the fact that some reverse exchanges will fall outside of the Safe Harbor. A Non-Safe Harbor Reverse will f
