Besides the traditional 1031 Exchange, there are several other techniques that can be used to successfully complete a 1031 Exchange.  Each one tailored to meet your specific situation and goals.  

​​​​

Traditional 1031 Exchange

A set of real estate transactions that begins with the sale of the relinquished property.  The net sales proceeds are placed into escrow and used towards the purchase of the replacement property.

​

Reverse 1031 Exchange

The replacement property is acquired in advance of the sale of the relinquished property.  While this is a slightly more complex transaction, the significant issue is that the exchanger must fund the acquisition of the purchase of the replacement property without the benefit of the proceeds from the sale of the relinquished property.  Once the relinquished property sells, then the exchanger may receive the proceeds from the sale.  An accommodator is necessary to accomplish this.

​

Improvement or Accommodation 1031 Exchange 

There are a few variations with these types of transactions.  Some professionals strictly adhere to the Accommodation Exchange approach while others are comfortable with the Improvement Exchange approach.  

​

Improvement Exchange
In this type of exchange the funds from the sale of the relinquished property are placed in escrow as discussed above.  There are two ways this exchange can emerge, however, both exchanges must respect the 180-day time limit of an exchange.
 

1.  The exchanger locates a seller (usually a contractor or developer) who is willing to improve the replacement property.  The exchanger then purchases the improved property towards the end of the exchange period like a traditional exchange.
​

2.  The exchanger directs the exchange to acquire the replacement property, enters improvement contracts and directs the exchange to direct-pay the improvement contracts.

​

​Accommodation Exchange

This is a more complex set of transactions and requires several closings.  The Future Exchanger engages an unrelated Third Party Accommodator willing to purchase the future replacement property and possibly improve it.  Typically, the Future Exchanger lends funds to the Third Party Accommodator to accomplish this.  The Third Party Accommodator then holds the future replacement property until the Future Exchanger is ready to acquire it from the Third Party Accommodator as the replacement property. 

 

When the Future Exchanger is ready, they market and sell the relinquished property into a traditional exchange.  At this point the net sales proceeds are in the exchange escrow account for the benefit of the Exchanger (formerly Future Exchanger).

Next the Exchanger, who is now the buyer, enters into a purchase transaction with the Accommodator as seller.  The Exchanger uses the proceeds in the exchange escrow to fund the transaction.  At the closing of this transaction, the Exchanger (formerly Future Exchanger) is repaid on the loans made to the Accommodator and now receives the net proceeds from the property they sold.​​