Exchange Variations

EXCHANGING CAN RANGE ANYWHERE FROM A SIMPLE SWAP OF TWO PROPERTIES TO A COMPLEX, MULTI-LEG, MULTI-PARTY TRANSACTION INVOLVING CONSTRUCTION AND/OR REVERSE EXCHANGES.

Simultaneous Exchanges

Prior to the 1979 Starker decision, most exchanges were limited to the simultaneous format. In a simultaneous exchange, both properties close the same day. Since 1991, the only "safe harbor" for a simultaneous exchange is the use of a Qualified Intermediary.

Delayed Exchanges

The Starker decision marked the advent of delayed exchanging. In the delayed exchange, "like-kind" property must be designated within 45 days of the sale closing. The replacement property must be closed by the 180th day. Once the replacement property has been located, the Intermediary purchases it and immediately trades the property to the exchanger.

Construction (Improvement) Exchanges

The construction exchange (sometimes termed improvement exchange) is an exchange where the Intermediary retains ownership to the replacement property and improves it. Once construction is complete, the Intermediary trades the property to the exchanger.

Reverse Exchanges

Ideally, an investor will be able to sell the relinquished property first and then close on the replacement property. Circumstances sometimes make it necessary to acquire the replacement property before closing on the relinquished property. This can be accomplished through a reverse exchange.

Multi-Property and Multi-Party Exchanges

An investor can trade out of one property into several, or consolidate from smaller properties into one larger property. Two or more investors owning a property together can trade into separate properties.

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You can also view or print our complete 1031 Tax Exchange document in Adobe PDF format.
	1031 Tax Exchange PDF file.

Disclosure
Jerry Babin - Realtor with RE/MAX Southern Realty cannot advise you concerning the specific tax consequences or advisability of a deferred exchange for tax planning purposes. You will be required to seek the counsel of your accountant or attorney. If we can answer any of your general questions, or those of your representatives, please do not hesitate to contact us.