Reverse 1031 Exchange

Acquire the Replacement Property First, Sell Later — Without Losing Tax Deferral

Our Nationwide Reverse 1031 Exchange Service

Full-Service Reverse Exchange Coordination

EAT formation and parking-period oversight

Coordinated lender, title, and CPA hand-offs

Documentation that fits your CPA’s workflow

A reverse 1031 exchange has more moving pieces than a forward exchange. The EAT entity must be formed and capitalized, the parking arrangement has to be documented, the 45-day identification and 180-day completion windows run concurrently. The lender on the replacement property must also accept the EAT as the titleholder during the parking period. Universal Pacific 1031 handles each piece. We form the EAT, draft the QEAA, coordinate with your lender and title company, and oversee the title transfer back to you when the relinquished property closes within the IRS Section 1031 and Revenue Procedure 2000-37 framework.

Reverse 1031 Exchange Structured Around Your Deal

Replacement-first or relinquished-first parking

Direct coordination with your lender and title team

180-day reverse exchange timeline tracked end-to-end

Every reverse 1031 exchange runs against different timing pressures. A replacement property comes on the market and won’t wait for your relinquished property to find the right buyer. A multi-property deal has overlapping closings. A 1031 candidate becomes available outside your normal acquisition window. Universal Pacific 1031 structures each reverse exchange to your specific facts. Whether your transaction calls for a replacement-first or a relinquished-first parking arrangement, we coordinate with your CPA, attorney, lender, and title company so the Revenue Procedure 2000-37 safe harbor stays intact through the full 180-day window.

Reverse 1031 Exchange Mechanics in Plain Terms

A reverse 1031 exchange lets you buy the replacement property before you sell the relinquished property. This is the right structure when the replacement comes on the market first and you can’t risk losing it to another buyer while your current property finds the right offer.

Universal Pacific 1031 acts as your qualified intermediary and forms the Exchange Accommodation Titleholder (EAT) that parks title to one of the two properties during the exchange. Following the safe harbor in Revenue Procedure 2000-37, the EAT holds title until the relinquished property closes — protecting the tax-deferred treatment under IRS Section 1031.

Our role covers the EAT setup, the qualified exchange accommodation agreement (QEAA), assignment documents, lender coordination, and the title transfer back to you at the end of the parking period. Read more about the reverse 1031 exchange timeline and how the 45-day identification and 180-day completion windows apply to your transaction.

Compliance with Revenue Procedure 2000-37

Reverse exchanges live or die by the safe harbor in Revenue Procedure 2000-37. The EAT must be a separate legal entity with qualifying interest in the parked property. The parking period cannot exceed 180 days. The exchanger and the EAT must operate at arm’s length. Missing any of these requirements can jeopardize or disqualify the exchange. We monitor each requirement and document every step so the transaction holds up under audit, and we coordinate with your CPA and attorney on the technical structure decisions.

Coordinated EAT Setup and Title Oversight

When the right replacement property hits the market, you have days, not weeks, to lock it down. Universal Pacific 1031 forms the EAT (a single-member LLC owned by Universal Pacific), capitalizes it, drafts the qualified exchange accommodation agreement, and handles the title transfer at the end of the parking period. Title companies and lenders unfamiliar with the Revenue Procedure 2000-37 safe harbor can introduce delays. We coordinate directly with them so the EAT-to-investor transfer on or before day 180 happens on schedule and within the safe harbor terms.

How It Works

Reverse Exchange Timeline Tracking

Dedicated Reverse 1031 Coordinator

EAT Title and Escrow Coordination

After your first consultation, you receive a written timeline of the reverse exchange. It covers the EAT acquisition date, the 45-day identification deadline, the parking-period milestones, and the final closing window. You also get regular updates on the relinquished property marketing, the parking arrangement status, and the documents needed at each stage. Daily reconciliation of exchange funds is available on request, and the qualified intermediary stays in touch with your CPA and attorney throughout the 180 days.

FAQ

What is a reverse 1031 exchange?

A reverse 1031 exchange lets you acquire the replacement property before selling the relinquished one. An Exchange Accommodation Titleholder (EAT) parks title to one of the two properties while you complete the sale, keeping the tax-deferred treatment intact under IRS Section 1031 and the Revenue Procedure 2000-37 safe harbor. This structure works when the right replacement comes up first and you can’t risk losing it.

How much does a reverse 1031 exchange cost?

Reverse exchange fees typically run $6,000 to $10,000, higher than a forward exchange because of the EAT formation, the parking period, and the added coordination with lenders and title companies. The fee covers the qualified intermediary role, EAT setup, document drafting, and oversight through the parking period. We provide a fixed quote at engagement.

What is an Exchange Accommodation Titleholder (EAT)?

The EAT is a single-member LLC that takes legal title to either the replacement or the relinquished property while the exchange is in progress. Universal Pacific 1031 forms and operates the EAT for you. The IRS requires this structure because you can’t hold title to both properties yourself and still qualify for tax deferral.

What happens if I miss the 180-day deadline?

The exchange fails and capital gains tax on the relinquished property comes due. The 180-day window is firm and has no extensions, even when your tax-filing deadline falls earlier. Talk to your CPA about your timeline before engaging, and contact Universal Pacific 1031 at least seven to fourteen business days before the replacement closing so the documents are in place.

How long does it take to set up a reverse exchange?

Typical setup from engagement to EAT acquisition runs seven to fourteen business days, depending on financing complexity and lender coordination. If you already have a replacement property in escrow, contact Universal Pacific 1031 today — the exchange agreement must be in place before the closing happens, and earlier engagement gives the title and lender teams time to align.

Can I do a reverse exchange on a property I want to improve before resale?

That’s actually a different structure called an improvement (or build-to-suit) 1031 exchange. It allows construction or improvements on the replacement property during the parking period using exchange funds. The improvement exchange has its own mechanics and timing rules — we cover the details on a separate service page.

What are the most important reverse 1031 exchange rules to follow?

Five rules drive the reverse 1031 exchange: complete the full exchange within 180 days of EAT acquisition; identify the relinquished property in writing within 45 days; hold title through the EAT rather than holding both properties yourself; reinvest the full proceeds from the relinquished sale into the replacement property at equal or greater value; and report the exchange on IRS Form 8824 (plus FTB Form 3840 for cross-state California exchanges). Missing any of these can jeopardize or disqualify the exchange. Talk with your CPA on the tax treatment and contact Universal Pacific 1031 before any closing so the documents are in place.