Safe Harbor Exchange, Inc. is an independent Qualified Intermediary for IRC § 1031 tax deferred exchange transactions. As a member of the Federation of Exchange Accommodators, Safe Harbor is a leader in IRC § 1031 Exchange Intermediary services. Our knowledgeable staff, combined with our commitment to service with integrity, provides taxpayers with an unparalleled professional team.
Forward Exchange:
The most common type of exchange, the “Forward” or “Standard” delayed exchange, happens when a property is sold (the Relinquished Property) and another property is purchased (the Replacement Property) within the 180 days following the sale of the Relinquished Property. For a “forward” delayed exchange under the safe harbor rules, the sale proceeds must be held by a Qualified Intermediary between the sale of the relinquished property and the subsequent purchase of the replacement property.
*Simultaneous Exchange:
A Simultaneous Exchange occurs when the relinquished and replacement property escrows are closed at the same time. This can happen when two properties are swapped, property for property between the same two individuals or entities, or it can also happen when the relinquished property is sold and the replacement property is purchased both on the same day. Because timing is critical and things can go wrong with escrow or title, a Qualified Intermediary may be necessary to facilitate the exchange, as this gives the investor the protection of the 1031 safe harbor rules under a forward exchange.
*Reverse Exchange:
In a Reverse Exchange, the replacement property is purchased before the sale of the relinquished property. The replacement property must be held by an Exchange Accommodation Titleholder (EAT) until the sale of the relinquished property, which must take place within the 180 days following the purchase of the replacement property. The relinquished property is also transferred to the EAT, and the EAT then deeds the relinquished property to the Buyer. At the conclusion of the reverse exchange, title to the replacement property is transferred from the EAT to the exchangor. Due to its complexity and inherent risks, a reverse exchange generally incurs much higher fees, but may be more convenient for the taxpayer with regard to locating a replacement property.
*Build-to-Suit or Improvement Exchange:
Build-to-Suit or Improvement/Construction Exchanges occur when the taxpayer uses the funds from the sale of the relinquished property to construct improvements on the replacement property. The property on which the improvements are constructed cannot be held by the taxpayer but must be held by a third party, the Exchange Accommodation Titleholder (EAT), until either the improvements are complete or until the end of the 180 day exchange period, after which the replacement property, with the improvements, is deeded to the taxpayer. As with the reverse exchange, due to its complexity and inherent risks, this type of exchange generally incurs higher fees, but may be more convenient for the taxpayer if the taxpayer has a clear vision and knows what is and is not possible to achieve during the 180 day time frame.
*For informational purposes only. Safe Harbor Exchange, Inc. facilitates forward exchanges only. Please ask your agent or broker for a referral to a qualified intermediary that may assist you with your simultaneous, reverse, and build-to-suit or improvement exchange needs.