Starker Services, Inc. is the nation’s oldest and most experienced independent Qualified Intermediary firm, successfully completing thousands of exchanges since its inception in the mid-1980’s.  Formed following the landmark Starker tax court decision, our sole function is to provide highly trained professionals and Certified Exchange Specialists® to discuss exchange strategies and prepare the accurate documentation needed to support all forms of tax deferred exchanges, including delayed, simultaneous, reverse and construction exchanges.  Every major real estate firm has used Starker to counsel their clients in the strategies which may be available on the sale of investment or income-producing real estate.  We strive to offer you the best in personalized 1031 exchange services. 


Types of Exchanges

  • The Delayed Exchange or “Starker Exchange”

A delayed exchange is when the sale closing of the investment property (“relinquished property”) occurs first and the closing on the purchase of the new investment property (“replacement property”) is at a later date.  Sometimes, this type of exchange is referred to as a “Starker Exchange”, after the well-known 9th District Court case in which the court ruled in the taxpayer’s favor for a delayed exchange prior to the current IRS rules and regulations.  There are strict time frames and rules for identification of potential replacement property and a completion deadline for a delayed exchange. The IRS code dictates 45-days for identification of replacement property and 180-days to complete the exchange.  The timeline starts from the closing date of the relinquished property.


  • Simultaneous exchange

In this type of exchange, the closing of the Relinquished property and the Replacement property take place on the same day.  Prior to the 1979 (Starker) decision mentioned above, most exchanges were limited to the simultaneous format. Since 1991, the only “safe harbor” for a simultaneous exchange is with the use of a Qualified Intermediary.


  • Reverse Exchange (Title Parking Arrangement)

This type of exchange allows for the taxpayer to acquire a property prior to the sale of the relinquished property.  Revenue Procedure 2000-37 published by the Internal Revenue Service on September15, 2000, provided the first safe harbor for taxpayers wishing to utilize this exchange structure.


In a Reverse Exchange, the replacement property closes before the client’s relinquished property closes.  There are two formats for completing a Reverse exchange.  Because the taxpayer cannot own both properties at the same time, the Qualified Intermediary (“QI”) acting as an Exchange Accommodation Titleholder (“EAT”) must hold title to either the replacement property or the relinquished property while a buyer is found for the relinquished property.  Once a buyer can close on the relinquished property and prior to the 180-day completion deadline, the reverse exchange is completed with the Exchange Accommodation Titleholder transferring title to the taxpayer.


There are many reasons it may be advantageous or necessary to purchase and close on replacement property prior to selling.  The investor may have located a replacement property and does not want to lose the opportunity.  Perhaps a seller is not willing to accept an offer contingent on the sale of the investor’s property.  Or a business owner may need time to make improvements to the new property to suit the business needs, so it is move in ready when the relinquished property closes.  There are many investment and practical reasons to contemplate using the Reverse exchange format.  It is frequently used in combination with another form of exchange such as a Reverse/Improvement exchange.  The Reverse exchange is more complex and requires prior consultation with the QI and coordination with the taxpayer’s tax and/or legal advisors.


            Two types of Reverse Exchanges

  • Structuring the Reverse Type “A” (Exchange Last)
  1. Used when the replacement property is purchased for cash or the seller is providing financing or if the lender will allow the EAT on title.


  1. The Qualified Intermediary (“QI”), as an Exchange Accommodation Titleholder (“EAT”), buys the replacement property with a loan from the exchangor. The EAT retains ownership for up to 180 days until a buyer for the relinquished property can close, the exchange proceeds from the sale are used to acquire the replacement property from the EAT, the loan from the exchangor is paid  and the exchange is completed.



  • Structuring the Reverse Type “B” (Exchange First)
  1. Used when the EAT cannot go on title to the replacement property.


  1. The exchangor loans the EAT funds equal to their equity in the relinquished property. The EAT then buys the relinquished property in a regular Qualified Intermediary exchange. The QI then acquires the replacement property with funds from the sale of the relinquished property to the EAT and immediately transfers title to the exchangor and the exchange is complete.  The EAT remains on title to the relinquished property until it is sold (only up to 180 days) and the proceeds are used to repay the loan from the exchangor.


  • Reverse/Improvement Exchange
  1. Combines the features of the Reverse and Improvement Exchange formats.


  1. Used when the exchangor must make improvements to the replacement property prior to closing on the relinquished property.


  • Construction Exchange (also known as Improvement or Build-to-Suit)

An improvement or construction exchange is used when a taxpayer wants to acquire a property and arrange for construction of improvements to be made on the land before it is received as replacement property. It is typically done as a delayed exchange but may also be combined with a reverse exchange.  The improvements may be a building on an unimproved lot or

 improvements made to an existing structure.  Many times, it is used to “balance an exchange”.


  • Multi-Property and Multi-Party Exchanges

An investor can exchange out of one property and purchase multiple replacement properties or consolidate their real estate investments by exchanging out of more than one property and purchase a larger property.  Attention must be paid to the different timelines from each property relinquished and the corresponding identification rules to balance the exchange.

Two or more investors that own a property together can exchange into their own separate replacement properties.


  • Personal Property Exchanges

The 2017 Tax Cuts and Jobs Act (“TCJA”) eliminated personal property exchanges under IRC §1031 as of January 1, 2018.  There are now significant changes to tax treatment of these personal property assets.  Investors should consult with their tax advisor when contemplating a sale of business personal property.


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