A number of people take advantage of the IRS 1031 tax exchange in the United States. It is however, only available after you have sold one property and buy the second in a defined period. Reverse 1031 tax exchange comes into picture when you want to purchase the new property first and then sell out the original property. The Internal Revenue Service has declared its stand on reverse 1031 tax exchange in the Revenue Procedure 2000-27. The said procedure was declared in September 2000. The document introduced a "Safe Harbor" in the form of Exchange Accommodation Titleholder or an EAT. An EAT is limited liability company. It acts as a parking lot which would hold the title of property you purchased until you do not sell out the old property. You are asked to observe a time limitation between the purchase of new property and sale of original one. The span of this limitation is 180 days from the purchase of new property. Moreover you are required to identify the old property within first 45 days of the 180 days that are mentioned above. Please consider that the Internal Revenue Service does not provide this safe harbor to all types of properties. There is a Non Safe Harbor reverse exchange which does not come with th180 days clause. The most common example of this kind of an exchange is a construction exchange. Such an exchange would take more time for completion and therefore it can not be treated using the generalized clauses. For your convenience we discuss the overall process of a reverse 1031 tax exchange here. The first stage here is purchase - contract stage. This is the stage where you have to work out the purchase procedure of new property. You must include the tax deferred exchange related clauses in your contract. Selection of the company which would hold the escrow is also required at this stage. This is followed by a purchase - financing stage. Here you have to procure the loan in the name of EAT. You may be required to act as the guarantor of the loan. An assumption clause also comes into the picture. This is followed by the purchase - closing stage. You have to finalize the deal via a Qualified Intermediary. He must be provided with all the concerned documentation. After this the property is transferred to EAT and money is given to property seller. Following this you would be required to identify the property that you would sell out. This must be done in exactly 45 days when counted from the date on which the deeds of property were drawn in the name of EAT. The next stage if that of sale - contract. Here you sell out the property you marked for sale. It must be done within 180 days including the 45 days mentioned earlier. Finally you can get the property transferred from EAT to your own name after notifying the appropriate authorities. While the reverse 1031 tax exchange is a long procedure, it is very simple on and can be accomplished very easily.