What are the Different Types of 1031 Real Estate Exchanges?

·         Simultaneous Exchange:   It refers to an exchange of the relinquished property for the replacement property occurring at the same time.

·            Delayed Exchange:   It occurs when there is a time gap between the transfer of the Relinquished Property and the acquisition of the Replacement Property. It is a type of exchange wherein the investor has the flexibility of up to maximum 180 days to purchase a replacement property.

·            Build-to-Suit (Improvement or Construction) Exchange   : This allows the taxpayer (exchanger) to build, or construct on the replacement property, using the exchange proceeds.

·            Reverse Exchange   : A type of exchange wherein the replacement property is acquired first and then current property is traded. If you would like to acquire a real estate before you sell your current property, reverse exchange can be ideal option, as it will save thousands of dollars.  

1031 Exchange Period / Timeline  

The Identification Time: This is the very important time during which the party selling a property must identify other replacement properties that he/she intends to buy. The identification can be changed, but cannot be altered after the 45 period has passed away. This 45 day deadline must be followed under any circumstances and is not extendable in any way, even if that 45th day falls on a Saturday, Sunday or any legal US holiday. This exchange period start running at the closing of the relinquished (sale) property.  

The Exchange Period:  

This refers to a total of 180 days, during which they must complete the 1031 exchange by acquiring all of the replacement properties. It is known as the Exchange Period under 1031 exchange (IRS) rule. This period ends at exactly 180 days after the date on which the person transfers the property relinquished or the due date for the person's tax return for that taxable year in which the transfer of the relinquished property has occurred. As per the 1031 exchange (IRS) rule, the 180 day deadlines has to be adhered to under any circumstances and is not extendable in any situation, even if 180^th day falls on a holiday in US.