Types of Exchanges

Delayed Exchange

When the relinquished property is transferred to the buyer, the taxpayer has often not yet chosen the new property he or she wants to acquire as a replacement. When that is the case, a deferred exchange is necessary. The taxpayer has 45 days to identify the replacement property. The transfer of the replacement property must close within 180 days of the transfer of the relinquished property.

Tenant in Common 721 Exchange

Tenant in Common is also known as fractional ownership. Under this co-ownership structure, you will own an undivided fractional interest in an entire property and share in your portion of the net income, tax shelters, and growth. Further, you will receive a separate deed and title insurance for your percentage interest in the property and have the same rights as a single owner. Because Tenant in Common opportunities are often "packaged" with management and financing in place, they offer efficie

Because Tenant in Common opportunities are often "packaged" with management and financing in place, they offer efficiency in the identification, acquisition, financing, closing, and operating stages of real estate ownership. Fractional ownership also provides you with the ability to diversify your 1031 tax-free exchange into more than one property and to participate in potentially larger, institutional quality properties. Investors may participate in large industrial, commercial, and residential

Build to Suit Exchanges

Also referred to as a construction or improvement like-kind exchange, these transactions allow the taxpayer to build, construct, or make capital improvements to a property before acquiring it as a replacement. Exchange proceeds from the relinquished property may be used to fund the construction or build-out within certain guidelines. An Exchange Accommodation Titleholder (EAT) may hold the property during construction as part of a Parking Arrangement. The Qualified Intermediary (Accommodator) c

An Exchange Accommodation Titleholder (EAT) may hold the property during construction as part of a Parking Arrangement. The Qualified Intermediary (Accommodator) controls exchange funds for acquisition of replacement property and payment of construction costs. By the end of the 180-day holding period for the exchange, the improved replacement property is transferred to the taxpayer to complete the tax-deferred exchange

Structuring a Build-To-Suit Exchange may allow the taxpayer to purchase a replacement property of lower value, and make capital improvements to increase the value to equal or greater than the relinquished property- thereby avoiding tax liability.

Reverse Exchanges

If the Taxpayer has found his or her replacement property and must close on it prior to the time that the relinquished property is ready to close, then the transaction becomes a "reverse exchange." The IRS requires that a reverse exchange use one of the two parking procedures below:

Type A: Relinquished Property Parked Taxpayer acquires the replacement property and conveys the relinquished property to the Exchange Accommodation Titleholder ("EAT"), using an exchange intermediary.

Type B: Replacement Property Parked The EAT acquires the replacement property. The EAT may construct improvements on the property if needed. When the taxpayer's relinquished property is ready to close, then the taxpayer will exchange the relinquished property for the replacement property through an exchange intermediary.