A reverse exchange is a 1031 exchange in which the replacement property is acquired before the relinquished property sells.
In a reverse exchange the investor buys before selling, which is useful in a competitive market where a good NNN property will not wait. An exchange accommodation titleholder takes title to either the new or the old property, and the same 45-day and 180-day deadlines apply. Reverse exchanges require more cash or financing up front, and they are more costly and complicated than a delayed exchange. They should be planned with a qualified intermediary and tax advisor before the purchase.