What is a reverse 1031 exchange?

A reverse 1031 exchange represents a tax deferment strategy when, for a variety of reasons, the replacement property must be purchased before the relinquished or old property is sold. It is more complex than a forward 1031 exchange and requires careful planning, however the timeline of a reverse exchange follows standard 1031 exchange rules.

What does eat stand for in a 1031 reverse exchange?

The EAT is a single member limited liability company (SMLLC) created for the purpose of holding the property for the duration of the 1031 reverse exchange. The SMLLC is never reused or simultaneously holding property for another exchange.

How long does a reverse 1031 exchange take?

The exchange must be completed within 180 days from the acquisition of the replacement property. This deadline ensures that the investor promptly sells the relinquished property, finalizing the exchange. Once the investor sells the relinquished property, the QI facilitates the final steps of the reverse 1031 exchange.