3 Types of 1031 Exchanges to Consider

There are several different ways in which you can conduct 1031 exchanges of real estate. In this article, we are going to walk through three of the most common types of 1031 exchanges to consider when selling qualifying property.

Forward Exchanges

This is the most common type of 1031 exchange in which a taxpayer sells a relinquished property, and then with the following 180 days acquires a like-kind replacement property, all while deferring capital gains taxes.

Reverse Exchanges

The second most common type of exchange is the reverse exchange. What makes this type of exchange different is all in the name – the outcome is the same but the steps are done in reverse order. Instead of selling your relinquished property first (as you would in a forward exchange), you acquire your replacement property first in a reverse exchange. This is a great way to grab that perfect property before you’re able to sell your relinquished property.

Build-to-Suit Exchanges

Finally, build-to-suit exchanges are 1031 exchanges in which you construct improvements to your replacement property as part of the exchange. This type of exchange is great for people who have a replacement property that needs some work. It’s important to remember that any improvements made must be finished within the 180 day 1031 exchange time frame.

Minnesota 1031 Exchange Professionals

The Minnesota 1031 exchange professionals at CPEC1031, LLC have over twenty years of experience facilitating forward exchanges, reverse exchanges, build-to-suit exchanges, and more! We can help carry your exchange across the finish line and make sure you are able to defer 100% of your capital gains tax burden. Contact our team of professionals today to set up a time to chat about the details of your next exchange. Our main office is located in Minneapolis.

  • 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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