Reverse & Improvement Exchanges

If you find a replacement property that you would like to acquire before you sell your current property, you can utilize a Reverse Exchange to maximize tax savings. If you would like to build or make improvements to a replacement property, you can use the exchange proceeds by structuring an Improvement (Build-to-Suit) Exchange. This is also known as a "parking" transaction. Reverse and Improvement Exchanges are two of the more complex yet useful structures available.

Reverse Exchange

Reverse Exchanges require an Exchange Accommodation Titleholder (EAT) to hold title to either the client's old relinquished property or the new replacement property pending the completion of the exchange. 

Improvement exchange

IRS regulations prohibit an Exchanger from using exchange funds to improve property that the Exchanger already owns. If an Exchanger wants to use exchange funds to improve replacement property as part of a 1031 Exchange, the Exchanger can enter into an Improvement (Build-to-Suit) exchange whereby the EAT takes title to the new replacement property while improvements are being constructed so that the EAT can transfer the replacement property to the Exchanger at the higher improved value.