1031 Exchanges
Construction / Improvement Exchange
The construction exchange allows the property owner to improve on the replacement property by using tax deferred dollars.
Overview
The construction exchange allows the property owner to improve on the replacement property by using tax deferred dollars. The entire exchange equity must be spent on completed improvements or as a down payment by the 180th day.
How it works
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Improve the replacement property
The property owner improves on the replacement property by using tax deferred dollars.
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Spend the exchange equity
The entire exchange equity must be spent on completed improvements or as a down payment.
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Complete by the 180th day
Completed improvements or the down payment must be in place by the 180th day.
Best for
- Investors who want to build or improve the replacement property
- Deals where the replacement value needs to increase to defer all gain
Key considerations
- All improvements must be completed within the 180-day window to count
- Requires an accommodation titleholder structure
- Careful budgeting and scheduling are essential
FAQs
Can I use exchange funds to build?
A construction/improvement exchange is designed for this. Improvements generally must be completed within the 180-day window to be counted. Confirm with your advisors.
Start your Texas 1031 with Cedar Top
Tell us about your transaction and we’ll help you get set up. Remember to involve your CPA, attorney, and tax advisor.