Accounting Articles > Real Estate Taxation:

Accounting for a Reverse 1031, Starker, Like–Kind, or Tax Free Exchange

A reverse exchange is the same basic concept of a regular exchange, only the purchase of the new property occurs before the sale of the old property.

The trustee purchases the new property on your behalf and waits for the sale of the old property. When that sale occurs, the exchange is made. You are basically deferring the capital gain on real property into some point in the future.

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