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Reverse 1031 Exchange · California QI

California Reverse 1031 Exchange

Acquire replacement property before your California property sells. Simple 1031 forms an Exchange Accommodation Titleholder (EAT) LLC to hold one of the properties during the 180-day parking window.

Start Your Exchange California 1031 Hub
$1,500 flat fee Same-day setup $15M total insurance

$5M Fidelity Bond + $10M E&O Insurance

Segregated Escrow Accounts

IRS-Compliant Exchange Documentation

How a California Reverse Exchange Works

Three steps under the Rev. Proc. 2000-37 safe harbor. Simple 1031 forms the EAT, holds title, and coordinates the eventual swap.

1

EAT LLC Formed

Simple 1031 forms a single-purpose Exchange Accommodation Titleholder LLC. The EAT will hold title to one of the two properties (replacement or relinquished) during the parking period.

2

Replacement Acquired

You provide cash or bridge financing for the replacement purchase. The EAT takes title (or holds title to your relinquished while you buy replacement directly). The 180-day parking clock starts.

3

Relinquished Sells, Title Transfers

When your relinquished property sells within 180 days, exchange proceeds reimburse your bridge funds and the EAT transfers replacement title to you. The §1031 closes.

Is a Reverse Exchange Right for You?

A short framework. Below that, links to the other three structures.

When It Fits

  • You found the replacement property and need to lock it in now
  • Your existing property has a soft sale timeline or needs marketing
  • You can fund the replacement purchase with cash or bridge debt
  • You can complete both legs within 180 days

When to Consider Another Structure

  • You can sell first and identify within 45 days — a forward exchange is cheaper
  • You need to build on the replacement — consider an improvement exchange (related but distinct)
  • Your relinquished sale will not close within 180 days — the safe harbor expires

Other California Exchange Structures

Forward Exchange

$799

Improvement Exchange

$1,500

DST Exchange

$799

California-Specific Considerations

How California treatment intersects with this reverse exchange. Tax topics for your CPA — Simple 1031 handles QI mechanics only.

California Conforms to Federal 1031 Rules

California Revenue & Taxation Code Section 17024.5 generally conforms to IRC Section 1031 for like-kind exchanges of real property held for investment or business use. Federal 1031 rules — the 45/180-day deadlines, the like-kind requirement, the Qualified Intermediary requirement — all apply to California property.

The California Clawback (R&TC §§18032 & 24953)

When California property is exchanged into out-of-state replacement property, California does not permanently give up its taxing jurisdiction over the originally deferred gain. When the out-of-state replacement is eventually sold in a non-1031 transaction, California taxes that original California-sourced gain — even if the taxpayer has since moved out of state. Taxpayers with California-sourced deferred gain must file Franchise Tax Board Form 3840 annually to track the deferral. Simple 1031 is not a tax advisor and does not prepare Form 3840 — work with a California CPA familiar with the clawback before structuring your exchange.

Cross-State Exchanges Are Common

California investors frequently exchange into Nevada, Texas, Florida, and Arizona replacement property to simplify portfolio management or reduce ongoing state-tax exposure on rental income. These exchanges are fully federal-compliant and geographically like-kind. The California clawback still applies to the deferred gain — your CPA can model the long-term state tax picture.

Scope note: Simple 1031 LLC is a Qualified Intermediary. We do not provide tax, legal, or investment advice. Work with a qualified California CPA for state filings and tax planning, and a real estate attorney for legal questions.

California Reverse Exchange Pricing

Flat fee. Same in California as anywhere. No hidden charges, no state surcharges.

Flat Fee. No Surprises.

California Reverse Exchange

Buy first, sell later — EAT-structured under Rev. Proc. 2000-37

$1,500 /exchange
  • EAT LLC formation & single-purpose structuring
  • Segregated escrow for relinquished proceeds
  • Title and lender coordination during parking
  • 180-day deadline tracking under Rev. Proc. 2000-37
  • Dedicated exchange coordinator
  • IRS-compliant exchange documentation
  • $5M Fidelity Bond + $10M E&O Insurance
Get Started

Fee deducted from exchange proceeds after your California property closes. Nothing out of pocket to start.

California Reverse Exchange Questions

If you do not find your answer here, call us at (725) 224-5008.

Yes. The clawback (R&TC §§18032 and 24953) applies to all California-sourced deferred gain, including gain deferred via a reverse exchange. FTB Form 3840 is filed annually by your CPA. Simple 1031 does not prepare Form 3840.
Simple 1031 forms a single-purpose Delaware or Nevada LLC to act as the Exchange Accommodation Titleholder. The EAT acquires title to one of the properties (replacement or relinquished) and holds it during the 180-day parking window. California recording fees and transfer-tax treatment are handled at closing by your title company.
The EAT structure adds entity formation, additional escrow accounts, lender coordination during parking, and ongoing maintenance of a separate titleholder. The flat $1,500 covers all of it; no hourly billing.
No. Under Treasury Regulation §1.1031(k)-1(k), a party you have had a working relationship with in the prior two years — including your attorney or CPA — is a disqualified person and cannot hold exchange proceeds. The IRS requires an independent Qualified Intermediary.
Your exchange proceeds are held in segregated escrow — never commingled with operating funds or other clients' exchanges. Simple 1031 carries a $5M Fidelity Bond and $10M Errors & Omissions Insurance, and our escrow accounts use FDIC-insured banking partners.
Simple 1031 charges a flat $1,500 for the Reverse exchange. Same flat fee in California as anywhere else — no state surcharge, no hourly billing. Fee deducted from exchange proceeds after closing.
No. Simple 1031 is a Qualified Intermediary, not a tax advisor. Your CPA prepares Form 8824 and any state-specific filings. We provide the exchange documentation your CPA needs.

Start Your California Reverse Exchange

Tell us about your California property. We will respond within one business day.

Your information stays confidential. We respond within one business day. Or call now: (725) 224-5008.

Ready to Start Your California Reverse Exchange?

Engage Simple 1031 before you close. Flat $1,500 fee. Nothing out of pocket to start.

Start Your Exchange Call (725) 224-5008