(The following is an excerpt from our 1031 Advisor newsletter located here )
Taking a Break frin the global Credit Crunch, Reverse Exchanges received good news from the Treasury Department last month with a ruling that described how a Reverse Exchange can be used with a (Forward) Deferred Exchange.
Example. An investor may decide to sell multiple properties (A, B, and C) in a Section 1031 Exchange in order to purchase another larger property (D). In preparation for the Exchange, the investor may have located the specific larger property and entered into a contract to acquire the property. For example, Property A, Property B and Property C are due to close on September 15, 2008. The new Property D is equal to or greater in price to the combined sale price of Properties A, B and C. The new property D, is scheduled to close on September 30, 2008.
However, for some reason, Property C did not close on September 15, 2008. This may have bee due to loan problems, appraisal issues, title defects, or buyer default.
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