When the exchange guidelines were published in April of 1991, there were no safe harbor guidelines for reverse exchanges. The IRS has released a "revenue procedure" effective September 15, 2000 to provide a safe harbor for the reverse exchange. A reverse exchange occurs when the taxpayer (exchanger) arranges to have the replacement property acquired before they are able to sell their relinquished property. Under the new procedure, the taxpayer may enter into a written agreement (called a Qualified Exchange Accommodation Agreement) whereby the Qualified Intermediary takes title to the Replacement Property. The Qualified Intermediary can hold title up to 180 days while the taxpayer identifies and then sells the Relinquished Property. There are additional fees involved and careful planning is required to successfully navigate through this new safe harbor. Other techniques for structuring a reverse exchange are still possible and should be explored before embarking on the newest procedures. With the reverse exchange, the identification timelines and rules are the same as with the delayed exchange, although there is a difference in the Identification Notice. Instead of identifying the replacement property within 45 days, you will need to identify the relinquished property(ies). This is the property you intend to sell to generate the sales proceeds needed to acquire your replacement property held by the Qualified Intermediary. The entire process must be completed within 180 days to receive tax-deferred treatment.