An Exchangor should consider doing a reverse exchange when they need to acquire their Replacement Property before selling their Relinquished Property.
We have created numerous limited liability companies (LLCs) solely to hold property for a reverse exchange.
Maybe. The county where the property is located may assess supplemental taxes for the period during which Downstream holds title to your property during a reverse exchange. After completing your reverse exchange, Downstream withholds an estimated supplemental tax amount from your proceeds. If the county assesses supplemental taxes, Downstream pays that amount and then the Exchangor must petition the county for a refund. Many of our clients who have petitioned the county have received refunds for the supplemental taxes paid. If the county does not assess supplemental taxes within the next year, we will refund the amount withheld to you.
Yes. We use a document service to prepare grant deeds and record title changes. They charge about $175 to transfer the title to one property. For a Method 2 reverse exchange, exchange funds can be used to pay this fee.
Also, if your reverse exchange fails, in some states (HI, AZ) you must pay transfer taxes and escrow fees to have your property returned.
Yes. Properly doing a reverse exchange will allow you to defer taxes exactly as if you correctly did a delayed exchange.
In a Method 1 reverse exchange, after the Accommodator takes title to the Relinquished Property, the client has 180 days to sell that property.
In a Method 2 reverse exchange, the client has 180 days to sell the Relinquished Property after the Accommodator takes title to the Replacement Property.
The above information is provided for general information purposes only. You should discuss your actual individual property transaction with your current attorney, certified public accountant, or us.
We know you will have questions about your transaction and encourage you to contact us. We will be pleased to assist you.
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