Reverse exchanges became possible in 2002. In order to make a reverse exchange work, the title to your replacement property must held by an exchange accommodation titleholder (EAT) until you sell the relinquished property. A qualified intermediary is then used to complete the exchange.

Some of the steps in a reverse exchange are the opposite of those in a regular like-kind exchange. Instead of identifying a replacement property, you'll identify the relinquished property within the forty-five-day identification period and close on it within the 180-day replacement period.

You will sign a written agreement with the EAT that's similar to the contract you sign with a qualified intermediary. Ask your attorney and intermediary to explain the specifics of working with a qualified EAT to perform a reverse exchange. Be sure to get recommendations for the wording that should be inserted in purchase and sales contracts.