Let’s say you have a 60 unit apartment complex in Minnesota that you’ve owned for a long time and depreciated down over the years. Let’s also assume that the complex has a lot of deferred maintenance and it’s located in a neighborhood that doesn’t seem like it will grow in the future. You might decide that you’d rather be in Florida with a 120 unit complex. So you tell your intermediary to buy a piece of raw land in Florida and hold it for 25 months while you build the new unit. Towards the end of the construction, you decide to list your 60 unit property for sale. As long as you acquire your new completed replacement property within 180 days of the sale of your relinquished property, you should have a valid 1031 construction exchange.
However, it’s important to note that this type of exchange would fall outside of the Rev. Proc. 237 safe harbor and would be considered a bit riskier than a safe harbor exchange. It’s always a good idea to work with a qualified intermediary on any like-kind exchange but it’s especially important in non-safe harbor exchanges like the one outlined here.
Get the Help You Need with Your Next Like-Kind Exchange
Get the help you need with your next like-kind exchange by contacting the professionals at CPEC1031, LLC. With more than twenty years of experience, we have the skills necessary to make your 1031 exchange dream a reality. From document preparation, to fielding any questions you might have, we’ve got you covered throughout the entire 1031 exchange process. Reach out to our team of qualified intermediaries today to talk about the details of 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.
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