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What is a Forward Exchange?

A forward exchange, also known as a delayed exchange or a Starker exchange, is a tax-deferred exchange transaction in which the sale of a property is followed by the purchase of another property at a later date.

In a forward exchange, the seller of the first property, also known as the relinquished property, enters into an agreement with a qualified intermediary who holds the proceeds of the sale. The seller then has a specific period of time, typically 45 days, to identify a replacement property and an additional period of time, typically 180 days, to complete the purchase of the replacement property.

The forward exchange allows the seller to defer paying capital gains taxes and other taxes on the sale of the relinquished property until the replacement property is sold. By deferring taxes, the seller can reinvest the proceeds from the sale into a replacement property of equal or greater value, allowing them to maintain their investment and potentially increase their cash flow.

At 1031 Exchange Place, we specialize in facilitating 1031 exchanges, including forward exchanges, for our clients. Our team of experts can guide you through the exchange process, ensuring that you comply with IRS regulations and maximize the benefits of a forward exchange.