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Can an Exchanger buy the replacement property first and then sell the relinquished property?

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Can an Exchanger buy the replacement property first and then sell the relinquished property?

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Yes, but only through a reverse exchange. Reverse exchanges occur when the Exchanger wants to acquire replacement property before the relinquished property sells. The IRS issued Revenue Procedure 2000-37 that governs how reverse exchanges are to be transacted in order to minimize tax risks. While more complex than delayed exchanges, reverse exchanges are transacted quite frequently today in our ever-changing economy. It is not unusual to find the desirable replacement property before selling the relinquished property. It even seems to be a more secure method to insure the successful completion of a tax-deferred exchange. Additional planning is required when an Exchanger is contemplating a reverse exchange and typically their tax advisor will be involved with structuring the transaction. Because there are several ways a reverse exchange may be structured, additional planning is required.

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