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What is a Reverse 1031 Exchange?

The reverse 1031 exchange is actually a misnomer. It represents an exchange in which the exchanger locates a replacement property and wants to acquire it before the actual closing of the relinquished or exchange property. Since the exchanger cannot purchase a replacement property then sell a relinquished property and expect to exchange into the new property that he already owns, he must find a method to purchase the replacement property and still maintain the integrity of the exchange.