There are several different types of 1031 exchanges available to taxpayers in the state of Michigan. The most common types are the forward exchange and the reverse exchange. We’ll be focusing on reverse exchanges in this article. If you have any questions or would like to speak with a Michigan qualified intermediary, don’t hesitate to reach out to the professionals at CPEC1031, LLC at 877.373.1031.
Reverse Exchanges Explained
Reverse exchanges have the same ultimate outcome as forward exchanges, but the order in which things happen is different. In a typical forward exchange, the taxpayer sells their relinquished property first and then redeploys their net proceeds into a replacement property. As the name would suggest, a reverse exchange reverses the standard order of operations. So instead of selling your relinquished property first, the taxpayer acquires their replacement property first. Then, within the 180 day time period, they sell their relinquished property.
Regardless of whether you set up your 1031 as a forward exchange or a reverse exchange, the end result is the same capital gains tax deferral.
Benefits of a Reverse Exchange
Now you may be asking yourself why anyone would choose to do a 1031 exchange in reverse. While it may seem odd on the surface, there are a some very compelling reasons to consider a reverse exchange. The most important of which is that a reverse exchange allows you to move quickly to purchase a great replacement property when the market is hot. You don’t have to wait to sell your relinquished property before acquiring your new replacement property.
1031 Reverse Exchange Company in Michigan
Reverse 1031 exchanges offer a potentially huge tax savings for taxpayers looking to sell investment real estate. Make sure you have a skilled qualified intermediary by your side throughout the process. At CPEC1031, LLC, we have over two decades of experience facilitating like-kind exchanges of all types. Contact us today to learn more about the 1031 exchange process and see how our Michigan qualified intermediaries can help with your exchange – 877.373.1031.