When you are considering a 1031 exchange of real estate, there are many options to consider. Should you do a forward or reverse exchange? Do you want to construct improvements to the new property? These are two of the most important questions you need to ask yourself early on in the 1031 exchange process. In this article, we are going to discuss when to consider a construction or reverse 1031 exchange.
Reverse Exchanges & Construction Exchanges
A reverse 1031 exchange is an exchange in which the replacement property is purchased first, and the relinquished property is sold at a later date. A construction exchange is an exchange in which the exchangor constructs improvements to the new replacement property as a part of the exchange.
When is a Reverse / Construction Exchange a Good Idea?
The best option for your 1031 exchange will depend directly on your specific situation. Reverse exchanges can be beneficial when you need to make a deal quickly and grab a property before it sells to another buyer. Construction exchanges are great for those taxpayers who want to make improvements to their new property and count those improvements as part of the exchange.
1031 Property
At CPEC1031, we work with investors large and small who want to defer their capital gains tax on the sale of real property. We can guide you through the entire 1031 process from start to finish, answering all of your questions and preparing your required documents along the way. Contact us today to speak with one of our 1031 exchange professionals about your like-kind exchange. Our main office is in downtown Minneapolis, but we work with clients throughout the United States.
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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