George’s favorite Exchange was an “acquire first, reverse exchange”. Sounds complicated, but it’s not. Our client had negotiated the purchase of a significant new property but had been unable to sell a piece of existing property in time to do the deal. Rather than jeopardize the purchase, we created a single purpose entity (SPE), in this case, a Massachusetts trust, to acquire the new (parked) property.
Edmund & Wheeler, Inc. was engaged to create the new entity, hold the property until the old property was sold and the proceeds are available to acquire the “parked” property. The Exchangor funded the purchase with his own and other bank resources. Once the old property was sold, the new property was deeded to the Exchangor. Since it is not permissible to own the old and new property at the same time, this strategy accomplished the Exchangor’s desired outcomes, again without capital gains tax.