Thanks for the vid. Are your sure about the "Property Value Requirements" rule? You said that "The value of the replacement property must be equal to or greater than the value of the relinquished property to satisfy the rules of a reverse exchange." In that sentence, should the words "The value of the replacement property" be substituted with "The profit from selling the replacement property . . ." ? I have a lease with option to purchase. I intend on doing a double escrow. I'm going to buy the property from my landlord for $2.2 mil and then turn around and sell it for $3 mil. My profit is $800k. I can see where the replacement property would have to be $800k or more because if it was less than $800k, I'd be taxed immediately on any funds not contributing to the purchase of the replacement property. And that makes sense. It doesn't make sense to me that I would have to buy a replacement property for $2.2 mil (or $3 mil) because there wouldn't be a profit. And if there's no profit, what's the point of doing any kind of 1031 exchange--be it traditional or reverse? Your opinion would be helpful. Thanks, Keith
This video only explains the method of completing a reverse exchange where the EAT takes title to the replacement property. The EAT can also take title to the relinquished property as an alternative, and if you are obtaining a loan to purchase the replacement property, the relinquished property method will probably be the only way the bank will give you the loan.
What do you do about Earnest money and here in North Carolina non refundable Due Diligence money? These monies are due with the purchase contract and here in NC the Due Diligence money is paid to the seller directly.
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Thanks for the vid. Are your sure about the "Property Value Requirements" rule? You said that "The value of the replacement property must be equal to or greater than the value of the relinquished property to satisfy the rules of a reverse exchange."
In that sentence, should the words "The value of the replacement property" be substituted with "The profit from selling the replacement property . . ." ?
I have a lease with option to purchase. I intend on doing a double escrow. I'm going to buy the property from my landlord for $2.2 mil and then turn around and sell it for $3 mil. My profit is $800k.
I can see where the replacement property would have to be $800k or more because if it was less than $800k, I'd be taxed immediately on any funds not contributing to the purchase of the replacement property. And that makes sense.
It doesn't make sense to me that I would have to buy a replacement property for $2.2 mil (or $3 mil) because there wouldn't be a profit. And if there's no profit, what's the point of doing any kind of 1031 exchange--be it traditional or reverse? Your opinion would be helpful. Thanks, Keith
This video only explains the method of completing a reverse exchange where the EAT takes title to the replacement property. The EAT can also take title to the relinquished property as an alternative, and if you are obtaining a loan to purchase the replacement property, the relinquished property method will probably be the only way the bank will give you the loan.
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A video we needed! 👌🏼
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Looking forward to the future
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Great content
Appreciate that!
What are we comparing for the value? Is it appraisals? Or the book value of your current property against the appraisal of the new property?
It's going to depend on what your QI is comfortable with, but I typically see actual negotiated sales / purchase pricing
What do you do about Earnest money and here in North Carolina non refundable Due Diligence money? These monies are due with the purchase contract and here in NC the Due Diligence money is paid to the seller directly.