A 1031 exchange allows you to defer capital gains taxes when selling investment real estate. While the ultimate outcome is the same in most 1031 exchanges, there are several types of like-kind exchanges that each operate a little bit different. Here, we’re going to talk about the build-to-suit construction 1031 exchange and when it can be a beneficial option.
What is a Build-to-Suit Exchange?
A build-to-suit exchange (also known as a construction exchange) is a 1031 exchange in which the taxpayer conducting the exchange constructs improvements to their identified replacement property as a part of the 1031 exchange.
When to Consider a Construction Exchange
A construction exchange can be especially beneficial when you find a replacement property that is pretty good but not quite perfect. With a build-to-suit exchange you can take that replacement property and construct improvements to it in order to meet your requirements. That way, you can get the replacement property that fits your specific needs while adding the cost of the improvements to the 1031 exchange process.
Answers to Your 1031 Exchange Questions
Questions about the 1031 exchange process? We’ve got answers. At CPEC1031, LLC, we have been facilitating 1031 exchanges for over two decades. Our qualified intermediaries can walk you through the entire exchange process, prepare your documentation, and answer all of your questions along the way. Contact us today to learn more about the 1031 exchange process and how you can save money in capital gains taxes. You can find us at our primary office in Minneapolis or one of our satellite offices around the United States.