Exchange Accommodation Titleholder (EAT) Definition

What Is an Exchange Accommodation Titleholder (EAT)?

An Exchange Accommodation Titleholder (EAT) is a third party used to complete a reverse 1031 exchange. The EAT holds title to either the replacement or the to-be-relinquished property in the exchange until the title can be transferred fully to the buyer.


  • An Exchange Accommodation Titleholder (EAT) is a third party that temporarily holds the title to either the replacement property or the to-be-relinquished property in a reverse 1031 exchange.
  • These exchanges are a like-kind swap of property that skirts the Internal Revenue Code’s guidelines on the taxation of capital gains on property sales, which a swap technically is.
  • The EAT facilitates the exchange of the title between the two swapping owners and also coordinates with the tax advisors and attorneys of both.

What Is an Exchange Accommodation Titleholder For?

An Exchange Accommodation Titleholder is a crucial third party in a 1031 exchange or a reverse 1031 exchange of property. An EAT holds the title to the replacement or to-be-relinquished property in a reverse exchange until the title can be fully conveyed to the buyer[1].

exchange accommodation titleholder

Using an EAT plays an instrumental role in a reverse exchange, which, alongside a like-kind or traditional exchange, is part of a real estate investor’s tax strategy. These exchanges are guided by the Internal Revenue Code Section 1031, which governs the taxation of properties “swapped” (thus exchanged) between property owners.

Using a 1031 exchange, whether reverse or like-kind, allows the investor to avoid paying federal income tax on capital gains or losses on the transaction[2] and depreciation[3] from the swap, among other specific types of tax advantages.

For a qualified exchange accommodation agreement, the EAT must be an entity that is independent of both parties in the exchange. Their employees, close relatives, or partners are not allowed to be an EAT, nor may they have a history of employment with these parties as an accountant, real estate agent, attorney, or financial advisor within the past two years[4].

These guidelines are to ensure the parked property—that which the exchange accommodation titleholder acquires—isn’t providing beneficial ownership while the legal title is held by the EAT.

An Overview of a Reverse 1031 Exchange

When an owner swaps or exchanges their property for another, the IRS counts this exchange as a property sale and taxes it as such. However, when the sale happens under the exclusions provided for by Section 1031, the investor may instead enjoy a tax break from this swap.

1031 exchange

These transactions are counted only as a tax-deferred exchange when the property to be swapped is of like-kind, meaning real property of similar nature, even if they differ in quality or grade[5].

Typically, in a 1031 exchange, an owner sells their (relinquished) property and uses the sale proceeds to acquire another (replacement) property.

In reverse exchanges, the owner acquires the replacement property before they can sell the property to be relinquished. Since the owner cannot hold two titles at the same time to enjoy a tax break from the exchange, they will instead use an EAT to temporarily hold the title for the parked replacement property until the to-be-relinquished property can be sold and its title conveyed to the other owner[6].

Whether a traditional or reverse exchange, the time limit for a qualified exchange accommodation arrangement is 180 days, during which the transaction for a replacement property of equal or greater value has to materialize[7].

A reverse exchange benefits a real estate investor who wants to sell a property and use its proceeds to acquire another similar property, such as in a flipping scenario.
That said, Section 1031 is a complex beast and investors may need an attorney or tax specialist to ensure that the exchange adheres to IRS guidelines.

Benefits of a Section 1031 Exchange

Property acquisition using a Section 1031 Exchange, whether a straight exchange or a reverse exchange, offers some benefits, such as[8]:

high-value property

  • Unlocks access to higher-value property. A 1031 exchange enables investors to acquire properties that better match their investment goals or have the potential for higher returns, while still providing relief for federal income tax purposes.
  • Market diversification. Property investors using 1031 exchanges can easily diversify into new markets, as 1031 exchanges are allowed anywhere in the United States.

There are no significant downsides to the tax-deferral advantage of a 1031 exchange. However, some investors may consider the reduced depreciation basis for the replacement property.

This means that the replacement property’s tax will essentially be based on the purchase price minus the deferred gain on the relinquished property’s sale. This deferred gain will be taxed once it sells without entering another exchange. However, since many investors or businesses can seamlessly move from exchange to exchange, it is possible to postpone tax payments on the deferred gain indefinitely[9].

Responsibilities of an Exchange Accommodation Titleholder

An exchange accommodation titleholder primarily coordinates with both parties in the 1031 exchange and their tax advisors, oversees the parking transaction, and facilitates the smooth transfer of title.

An EAT should also:

  • Prepare all required exchange documents, such as the exchange agreement, applicable acknowledgments, and assignments.
  • Coordinate with the closing agent to ensure the transaction is documented not as a taxable sale but as a 1031 exchange.
  • Keep the exchange funds in a segregated, safe, interest-bearing exchange account until the acquisition of the replacement property.
  • Ensure the exchange is on track with essential milestones and provide timely reminders and updates to clients.

bank safe


  1. Realized. (2015.) Exchange Accommodation Titleholder (EAT). Retrieved from
  2. Murphy, C.B. (2020.) Qualified Exchange Accommodation Arrangements. Investopedia. Retrieved from
  3. Kagan, J. (2021.) Like-Kind Exchange. Investopedia. Retrieved from
  4. 1031 Corp. (n.d.) Qualified Intermediary (QI). Retrieved from
  5. Internal Revenue Service. (n.d.) Like-Kind Exchanges – Real Estate Tax Tips. Retrieved from
  6. Ray, R., Lynch, N.C. (2016.) Selecting a Qualified Intermediary for a Like-Kind Exchange. The CPA Journal. Retrieved from
  7. CWS Capital Partners. (n.d.) What Is a 1031 Exchange? The Basics for Real Estate Investors. Retrieved from
  8. TFS Properties. (n.d.) The Advantages and Disadvantages of a 1031 Exchange. Retrieved from
  9. Sell Tax Free. (2016.) Are There Any Downsides to a 1031 Exchange Advantage? Retrieved from

Bonus: Get a FREE copy of the INVESTOR HACKS ebook when you subscribe!

Free Subscriber Toolbox

Want to learn about the tools I’ve used to make over $40,000 per deal? Get immediate access to videos, guides, downloads, and more resources for real estate investing domination. Sign up below for free and get access forever.

Scroll Up

Welcome to

We noticed you are using an Ad Blocker

We get it, too much advertising can be annoying.

Our few advertisers help us continue bringing lots of great content to you for FREE.

Please add to your Ad Blocker white list, to receive full access to website functionality.

Thank you for supporting. We promise you will find ample value from our website.