Compass' Services

Reverse Exchanges

A reverse exchange is used when the client locates suitable Replacement Property prior to the sale of the Relinquished Property. The IRS established a safe harbor for reverse exchanges with Revenue Procedure 2000-37 , 2000-2 C.B. 308. There are two general types of safe harbor reverse exchanges, depending on the property parked: “Exchange First” (in which the accommodator acquires the Relinquished Property), and “Exchange Last” (in which the accommodator acquires the Replacement Property). Transaction fees for a reverse exchange are higher than a forward exchange. However, a Reverse Exchange helps solve a difficult exchange issue - timing.