Requirements
"Front Leg" Requirements
The EAT, through a qualified intermediary, acquires and holds title on the taxpayer's relinquished property, allowing the taxpayer to acquire replacement property from the third-party seller. The taxpayer has 180 days to find a third-party buyer and to transfer the parked relinquished property from the EAT to the ultimate buyer.
"Back Leg" Requirements
The EAT acquires and holds title on the replacement property from the replacement property seller. The EAT holds (parks) this replacement property for up to 180 days. From the date the EAT acquires the replacement property, the taxpayer has 45 days to identify which relinquished property he or she intends to transfer. When the relinquished property is ready to close, the taxpayer, through a qualified intermediary, exchanges the relinquished property for the replacement property, and the EAT transfers the replacement property to the taxpayer.
Other Facts and Requirements regarding Reverse Exchanges
The IRS has stated that, as an Exchanger, you must:
- Have a genuine intent to exchange
- Treat the EAT as the beneficial owner of the replacement property or the relinquished property for federal tax purposes
- Use an Exchange Accommodation Titleholder and a QEAA
In addition, ANi X31 Exchange Services requires that you:
- Indemnify the EAT from liability while holding title to either the replacement property or the relinquished Property
- Provide a Phase 1 environmental report on property to be held by the EAT
- Enter into a triple-net lease and management agreement on the property being held by the EAT
- Make all financial arrangements to acquire the replacement property in favor of and without recourse to the EAT
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