1031 Cap Ex Services
01
Delayed Exchange
(Most Common)
Delayed exchanges represent the most prevalent form of 1031 exchanges, offering investors flexibility when transitioning between investment properties. This process involves two crucial deadlines set by the IRS:
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Identification Period (45 days): Investors have 45 days to identify potential like-kind replacement properties following the sale of their current asset.
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Exchange Period (180 days): The acquisition of the chosen replacement property must be finalized within 180 days from the sale of the relinquished property. These timelines are typically non-negotiable with the IRS, emphasizing the importance of meticulous planning and execution for a successful delayed exchange.
03
Two-Party Simultaneous Exchange
The simultaneous exchange, involves a direct swap of ownership interests between two parties. While this eliminates the need for finding external buyers, it presents significant challenges. Locating properties with precisely matching fair market values and compatible debt and equity structures is often difficult. Additionally, any delays in the transfer process can jeopardize the integrity of the swap and expose participants to potential liabilities.
02
Reverse Exchange
This exchange strategy, known as a reverse exchange, allows investors to acquire a like-kind replacement property before they fully sell their current asset. Since simultaneous ownership of both properties isn't possible, a third-party entity called an Exchange Accommodation Titleholder (EAT) steps in. This intermediary, often established as a single-member LLC, temporarily holds either the relinquished property or the target asset. The process is governed by a Qualified Exchange Accommodation Agreement, ensuring a smooth and compliant transaction.
04
Construction/Improvement Exchange
This innovative strategy allows investors to leverage capital generated from a property sale to make substantial improvements on their replacement asset. These improvements can range from renovations and upgrades to existing structures to complete ground-up construction. By strategically utilizing improvement exchanges, investors can significantly boost the value of their acquired property, maximizing their return on investment.