A lot of people ask: “Can I sign a purchase agreement for my replacement property even before I have closed on my relinquished property?”
The answer is yes. You can go out and lock up a sure thing, put the handcuffs on that seller, and know that you have something to exchange into. In fact, if the seller is not patient and won’t wait for you to dispose of your relinquished property (perhaps because they have other offers), you can do a reverse exchange and have the exchange company form an LLC that becomes the surrogate purchaser and acquires the replacement property in your stead and holds it for your benefit during the exchange period. Ultimately, the answer is yes. Not only can you sign a purchase agreement, but when acting in a reverse exchange through an intermediary you can actually purchase the property first.
Consider Your 1031 Exchange Options
If you are sitting on investment real estate and thinking about selling, consider your 1031 exchange options. A like-kind exchange under section 1031 of the Internal Revenue Code allows US taxpayers to defer their capital gains tax burden on the sale of real property so long as the sales proceeds are reinvested in a new replacement property. Many taxpayers avail themselves of the tax-saving benefits of section 1031 and you can too! Contact the intermediaries at CPEC1031, LLC today to learn more.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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