Types Of Exchanges

There are several different structures in which a 1031 tax-deferred Exchange can be completed.  Some are much more difficult and expensive than others.

Delayed Exchange

By far the most popular type of 1031 Exchange, the Delayed Exchange allows investors to first sell their relinquished property and then purchase their replacement property(s) within the exchange timeline.  After the close of the relinquished property, the exchange funds are used to purchase the replacement property(s) no more than 180 days from the close date.

Simultaneous Exchange

In this simple 1031 Exchange, the relinquished property closes on the same day the replacement property is purchased, with concurrent closings.  Due to unforeseen circumstances that arise during real estate transactions, this type of exchange is hard to orchestrate, and should still be handled by a 1031 Exchange accommodator.

Reverse Exchange

The reverse exchange allows the taxpayer to purchase the replacement property prior to the close of the property they are selling.  Purchase first, sell after.  However, in order to qualify for the 1031 Exchange, the investor cannot hold title to both the relinquish property and the replacement property simultaneously.  The Qualified Intermediary must be used in this complex transaction.   Investors considering this type of intricate exchange should call GB 1031 at their earliest consideration.

Improvement Exchange

The improvement exchange, sometimes referred to a Construction Exchange or Build-To-Suit Exchange, is used when the investor wants to utilize exchange funds to build on or make improvements to their replacement property.  This is also a more complicated exchange option.  The key factor when considering an improvement exchange is that all exchange funds need to be used on construction costs prior to the 180th day of the exchange timeline.  Again, Investors considering this type of exchange should call GB 1031 at their earliest consideration.