We have previously discussed how 1031 exchanges work for selling farmland and then rolling the gain into additional farmland or other farm assets.
Under the 1031 rules, you typically sell your land (or other real property) through a qualified intermediary who will hold the funds. You then have 45 days to identify your replacement property (typically up to three properties) and then a total of 180 days after sale of your property to acquire it.
But what if the next door quarter section comes up for sale that you “must” buy and you need to sell some land to pay for it and you can’t get your land sold before the purchase closes. This is called a reverse 1031.
The IRS provided a safe harbor for reverse exchanges about 25 years ago that requires the following steps:
Keep reading with a 7-day free trial
Subscribe to Farm CPA Report to keep reading this post and get 7 days of free access to the full post archives.