Video: Can You Exceed 180 Days in a Reverse Exchange?

Can (“Exchangor” or “Taxpayer”) Person intending to conduct a 1031 tax deferred exchange, who transfers a relinquished property and thereafter receives a replacement property. Exchanger s go beyond the 180-day timeline in a reverse exchange? The short answer is yes, but only under specific conditions. To extend the timeline, the transaction must be structured as a "Non-Safe Harbor" Specialty Reverse Transaction. In this structure, an Also referred to as an "EAT", is typically a special purpose, limited-liability company that is used to own the legal title to property that is being parked as part of a reverse exchange. An exchange accommodation titleholder may not be a disqualified person. Exchange Accommodation Titleholder (EAT) holds the title to the property, typically the Replacement Property, within a Special-purpose Entity (SPE). Standard Reverse Exchanges, which follow IRS safe harbor rules, do not allow for this extension.

Exceptions to the 180-day limit are often discussed in the context of parking arrangements, where practical challenges like delays in injecting exchange value into property improvements can arise. While case law and tax authority support extending parking arrangements under an EAT in certain scenarios, it’s important to note that once the Those certain items of real and/or personal property described in the relinquished property contract and qualifying as “relinquished property” within the meaning of Treasury Regulations Section 1.1031(k)-1(a); The "Old Asset”, property or properties given up or conveyed by a taxpayer as part of a 1031 exchange. Relinquished Property is sold, the forward exchange timeline begins, and the strict 180-day limit to acquire Replacement Property applies.

In this educational video, understand how these exceptions work in specific Reverse Internal Revenue Code Section 1031 states that "no gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held for productive use in a trade or business or for investment." 1031 Exchange strategies.