Common Exchange Questions: Can I Make An Offer On Replacement Property

A very common scenario in 1031 exchanges is that the property owner lists his or her relinquished property but does not sell it before they find a great replacement property. The good news is that IRS code does permit you to make an offer on replacement property before closing the sale on your relinquished property. The only caveat is that in order for the exchange to be valid, the closing on the replacement property must take place after closing on the relinquished property, even if only by a few minutes.

Ok, great, so your exchange will work in those circumstances. But what if you find the perfect replacement property and have to close on it before you sell your relinquished property? The good news is that you can still take advantage of section 1031 with a reverse exchange. Although a bit more complicated than a standard exchange, this sort of exchange allows an investor to get exactly the property they need today, and subsequently sell their relinquished property later on.

To find out how we can help you find and close on your next 1031 exchange property or to learn more about the exchange process and our qualified intermediary services, please visit our website.