TYPES OF 1031 EXCHANGES
DELAYED
Exchanges
A Delayed Exchange is the most common form of 1031 exchange. Gives investors the flexibility to purchase a replacement property within 180 days of the sale of the relinquished property.
REVERSE
Exchanges
In a Reverse Exchange, an investor closes on the replacement property before selling their relinquished property. This is ideal for properties that won’t be on the market long in hot sellers’ markets.
CONSTRUCTION
Exchanges
In a Construction Exchange (AKA an Improvement or Built-to-Suit Exchange) you may use the deferred tax money from the relinquished property sale toward renovations on the replacement property.
SIMULTANEOUS
Exchanges
Simultaneous Exchanges are incredibly rare compared to their counterparts. But in this type of exchange, closings on the relinquished and replacement properties happen on the same day.
WHAT IS A 1031 EXCHANGE?
Named after Section 1031 of the IRS Tax Code, a 1031 Exchange is the process of exchanging investment properties of equal or greater value, so you can defer the capital gains tax on the profits. It’s a heavily regulated process that comes with timeline restrictions and limitations on which properties may be exchanged.
To navigate the IRS regulations, real estate investors are required to work with certified 1031 exchange intermediaries, like OLUMIE Holdings, to manage and guide them through the process.
