South Dakota reverse exchanges offer many benefits that other types of like-kind exchanges don’t. Let’s talk about how a reverse exchange works and when you should consider conducting one.
How a South Dakota Reverse Exchange Works
As the name implies, a South Dakota reverse exchange is the same as a forward exchange but done in reverse order. Instead of first offloading your relinquished property (as you would do in a forward exchange), a reverse exchange begins when you acquire your replacement property, and ends when you sell your relinquished property. All the typical 1031 exchange rules apply to a reverse exchange so you still only have 180 days in total to complete your exchange to ensure 100% tax deferral.
What are the Benefits of a Reverse Exchange?
Apart from the greatest benefit of capital gains tax deferral, a reverse exchange can be a huge boon in a hot seller’s market. Remember, once you begin your 1031 exchange, you only have 180 days total to complete the process. If you can’t find a replacement property that meets your needs within that 180 day time frame, your exchange will fail. A reverse exchange allows you to lock up a replacement property before you start the exchange process – giving you peace of mind that you will be able to complete your exchange on time. Let’s say you find a perfect replacement property in Pierre. With a reverse exchange, you can snag that property before someone else does and sell your property in Aberdeen after the fact.
Reverse 1031 Exchange Company in South Dakota
Interested in learning more about South Dakota reverse 1031 exchanges? CPEC1031, LLC has over two decades of experience facilitating 1031 exchanges in South Dakota and across the United States. Our qualified intermediaries have all the necessary skills to make sure your reverse 1031 exchange is fully tax deferred and executed on time. Contact us today to set up a time to chat with one of our 1031 exchange professionals about your South Dakota like-kind exchange.