There are several types of 1031 exchanges, each with their own benefits. In this article, we are going to outline the basic types of 1031 exchanges and discuss when to use each.
Forward 1031 Exchange
The most commonly used type of 1031 exchange is known as a forward 1031 exchange. This type of exchange begins when you sell your relinquished property. After that, you identify your replacement property withing the next 45 days, and acquire that replacement property within the next 180 days. When done correctly, this allows you to defer your capital gains taxes. A forward exchange is great to use anytime you own investment or business property that you want to dispose of without incurring a hefty capital gains tax bill.
Reverse 1031 Exchange
As the name implies, a reverse 1031 exchange has the same outcome as a forward 1031 exchange (namely tax deferral) but it operates in reverse. The first step in the process is acquiring your replacement property. Then, during the next 180 days, you sell your relinquished property. A reverse exchange can be particularly useful in a hot seller’s market when you need to lock up property quickly.
Build-to-Suit 1031 Exchange
A build-to-suit 1031 exchange (aka a construction exchange) involves constructing improvements to your property as part of the exchange. This type of exchange is useful when you have a property that requires a little TLC.
1031 Exchange Company in Minneapolis, MN
Based in Minneapolis, but serving the entire United States, CPEC1031, LLC is the skills and experience needed to bring your like-kind exchange across the finish line. Our qualified intermediaries have been working with taxpayers on forward exchanges, reverse exchanges, and build-to-suit exchanges for more than two decades. Let us help you navigate the 1031 exchange process from start to finish. You can reach us at our main office, located in downtown Minneapolis. Contact our team of 1031 intermediaries today to set up a time to discuss your next 1031 exchange of real estate.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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