A construction improvement exchange is a type of 1031 exchange that let’s the investor build or renovate property before completing their exchange. This can be incredibly beneficial for taxpayers who want to ensure that their new property is up to their unique needs. If you’re considering a construction exchange it’s important to be proactive and to involve a qualified intermediary early in the process. Our St. Cloud 1031 intermediaries have extensive experience advising clients throughout their 1031 exchanges. Give us a call today to discuss your exchange 612.643.1031.
Construction Exchanges
A construction exchange (also known as a build-to-suit 1031 exchange) works in much the same way as a standard forward exchange. The difference is that the taxpayer doing the exchange is able to make improvements to their new replacement property before they exchange into it. By way of an example, let’s say you have an apartment complex in downtown St. Cloud that you’d like to 1031 exchange out of and into an old hotel that you’d like to fix up. A build-to-suit exchange would allow you to make the necessary construction improvements to the old hotel building and include those in your exchange.
Get a better understanding of 1031 construction exchanges by watching the video below:
1031 exchanges must abide by certain rules and construction exchanges are no different. Taxpayers still have to abide by the strict time limits imposed by section 1031. Furthermore, the relinquished property must have been held for investment or use in your trade or business. And finally, you need to go up in your value, equity, and debt amounts when exchanging into new replacement property. Those are the primary benchmarks you need to hit in order to satisfy your exchange, but there are a lot more minute details that also need to be considered carefully.
St. Cloud Construction Exchange Professionals
Give us a ring today for help setting up your 1031 construction exchange in the St. Cloud area. Our qualified intermediaries have decades of experience helping clients in St. Cloud complete successful exchanges. We are standing by to answer all of your questions 612.643.1031.