Delayed exchange is not the only 1031 exchange type

If you have basic knowledge of 1031 exchange process, you might be aware of the fact that the investor gets a window of 45 days to identify a property and 180 days to close it. This is one of the most popular forms of 1031 exchange to defer capital gains tax and is referred to as delayed exchange.

In this exchange type, you need a middleman (or qualified intermediary) who keeps the cash obtained after selling the home. This cash is used for purchasing replacement property to complete the exchange.

Well, there are also other methods that real estate investors use for 1031 exchange.

The oldest method is known as simultaneous exchange. In this exchange type, the properties are swapped simultaneously between the investors. And, as there is monetary exchange involved, you don’t require a QI. As it becomes difficult to execute this type of exchange, it has become unpopular among investors.

Some investors also exchange their property through improvement exchange. This exchange involves improvement of replacement property to increase its value. Improvements and reconstructions have to be done within 180 days of selling the relinquished property.

Personal property exchange is another method to swap a personal asset for another of the same kind. The assets include artworks, livestock, business licenses, website url, and copyrights. The time-frame is 180 days.

There’s also a reverse exchange process used by some investors. The investor acquires the replacement property before selling his asset.

Tax exchange and other benefits of 1031 exchange

When we think of 1031 exchange, the first thought that comes to mind is that helps deferring the capital gains tax related to real estate investments. But, this is not the only benefit of 1031 tax exchange. Confused?

Ok, without further ado, let us discuss some other benefits you can enjoy if you indulge in 1031 exchange.

You can increase your regular income
If you are an owner of a vacant land that’s not drawing you any income on a regular basis, then you can think about exchanging it. You can swap it for residential or commercial real estate to get returns in the form of rents.

Consolidate your property
When an investor owns multiple investment properties, if often becomes challenging for him/her to manage the real estate. The investors can use 1031 exchange to own a single property instead of multiple small-sized properties.

Diversify the portfolio
Some individuals do the exact opposite of what we have discussed above. They sell their single property to acquire different property types.

Fractional real estate ownership
This is applicable if you are planning to invest in DST (Delaware Statutory Trust) property. A DST property has multiple owners, which decreases the amount to need to pay to get a share of property. It also reduces the burden or managing the property and lets you further diversify the portfolio.

If you are interested in fractional real estate ownership through 1031 exchange, connect with FAI Exchange. They will find you a DST investment according your budget and needs.

Diversify your portfolio with fractional real estate ownership

With fractional real estate ownership, you can invest money into several properties. This is possible because you become one of the owners of the property, due to which you have to pay money. Even the risks associated with investments are largely reduced with this form of ownership. On the other hand, the possibilities of getting more profits are increased.

Whenever you purchase a property, you have to pay extra costs like renovation, property outfitting, and furnishing. But, with fractional ownership, all these costs can be saved. Even the time and hassles of outfitting the property are saved. This type of benefit is rarely offered by any form of real estate investment.

After purchasing the property, the owners have to take care of costs like repairs insurance, maintenance, and property tax. Some investors even hire property managers to take care of these operations. If you have a fractional ownership of the property, you will have to pay a minimal amount to maintain the property or for tax-related expenses.

And, the best part is that you don’t have to handle the tenants. Everything is taken care of by the trust. Due to all these advantages, fractional ownership related to real estate is gaining popularity. We, being one of the most trusted 1031 exchange companies, help you acquire fractional real estate ownership through DST investments.

With DST investments, you can enjoy all the benefits we have discussed above, along with the ability to defer taxes on capital gains through 1031 exchange.

Top tips for 1031 exchange you shouldn’t ignore

We, at FAI Exchange, have always helped accredited investors to invest real estate through Delaware Statutory Trust. We also help the investors by informing them about different aspects of 1031 exchange.

Through this blog post, we discuss some essential tips you should know related to 1031 tax deferred exchange.

Don’t forget the expenses

You can pay some expenses with the exchange proceeds. These expenses include escrow fees, transfer tax, brokerage commissions, and exchange fees. This will not affect your deal in terms of tax-related benefits.

Ensure the proceeds are safe

The funds you receive after selling the relinquished property are held by an intermediary till you acquire replacement property. Check how this party is holding the funds. Check the account type the intermediary is using for keeping the funds. You must also ensure that the intermediary you have selected is reputable and financially stable.

The documents should be signed before closing

Exchange documents such as agreement between intermediary and real estate investor, notice to the buyer, etc. should be should be signed before closing on the replacement property.

Purchase enough replacement property

The replacement property you are acquiring should be of equal or greater value than the property you have sold. All the net equity you have received from the sale should be invested into the purchase.

If you are seeking right real estate investment for your exchange, contact us for Delaware Statutory Trust (DST) properties. There are various other benefits of DST properties that individuals are unaware of.

Partial exchange in 1031 exchange processes


A lot of investors don’t know but they can defer some capital gain taxes and obtain cash for the remaining amount while selling property in a 1031 exchange.


An investor pays taxes on the debt obligations related to replacement property or the cash proceeds received. In both of these events, the investors receive a boot. A boot means a property that an investor receives during the exchange and is not considered like-kind. Receipt of cash is referred as cash boot.


The exchanger can receive the cash proceeds after purchasing the identified property. It can also be purchased after the exchange period finishes in case there are some properties that were identified but not bought. If the exchanger asks the closing officer for disbursing a fixed dollar amount related to proceeds, then also cash proceeds can be received by the exchanger.


It is advised to avoid doing an exchange if the boot is more than the amount of capital gain.


If you are a real estate investor looking for investment property in Massachusetts, you can connect with FAI Exchange for the same. This company offers exchange properties for 1031 in the form of Delaware Statutory Trust (DST). You can also get an advice on a partial exchange through the experts.


Learn more about the DST investments and 1031 exchange by visiting this link. You can call the representatives of the company directly to clarify your doubts: (888) 669-3332

The company also answers the queries via email: WLM@SNETINVEST.COM.

Major forms of 1031 exchange in real estate

The most common form of exchange related to 1031 in real estate sector is delayed exchange. A lot of individuals believe that it is the only form of exchange for the investors. To defer capital gains tax, the investors can exchange the properties through several exchange types.

The major types of exchange process include:

Delayed exchange

In this type, an investor purchases a replacement property after selling the relinquished property. After selling his/her property, the investor gets a time frame of 45 days to identify replacement property.

Simultaneous exchange

It is a process in which two investors directly swap the properties. A QI (Qualified Intermediary) is not needed for this exchange. There is no monetary exchange in this exchange and the process is considered quite difficult.

Improvement exchange

The investor can upgrade the replacement property to raise its value before making an exchange. The other features are similar to delayed exchange.

Reverse exchange

An investor can acquire the new property before selling the existing property in this form of exchange. There are some strict guidelines linked to the reverse exchange that an investor should follow.

Personal property exchange

This 1031 exchange process involves an exchange of personal asset against another asset of like-kind. The intangible assets include business licenses, copyrights, website URL, whereas the tangible assets include artworks, livestock, and vehicles.

If you are searching replacement property for 1031 real estate exchange, contact FAI Exchange for this purpose. For all the details, visit this link.

A qualified property in a 1031 tax deferred exchange

Both personal and real properties can be considered the qualified properties for a 1031 tax-deferred exchange. A property, which s held for productive use in a business/trade or for investment purpose is eligible for exchange.

But, there are some property types that are not qualified for the exchange. These types include:

• Certificates of trust
• Notes, bonds, or stocks
• Interests in a partnership of a limited liability company with multiple members.

Replacement property, which an individual plans to acquire, should be a like-kind to the property that is being relinquished. Like-kind refers to the properties that are similar in character or nature, regardless of the difference in quality or grade. Every real property can be considered like-kind. The factors like improvement or interest do not decide whether a property is like-kind. This means you can exchange a land with a building for a raw land. An investor can also exchange a single property for multiple ones. A personal property is not like-kind to a real property.

If you have a limited budget, you can consider Delaware Statutory Trust (DST) as an option for 1031 tax-deferred exchange. The DST investments can be considered like-kind to a real property.

We, at FAI Exchange, can help locate suitable DST properties that can be used to defer capital gains taxes. You can also connect with us to find a Qualified Intermediary for the exchange.

Major Parties involved in a 1031 exchange

When we talk about a 1031 tax exchange, four major properties participate in the exchange: the taxpayer, the intermediary, the buyer, and the seller. Apart from these, the advisors and real estate agents offer their support services during the exchange. Let’s check the roles of the major participants in an exchange.

The taxpayer

He/she is the central character of an exchange process. Also known as the exchanger, the taxpayer is someone who possesses the property and wants to exchange it to defer the taxes. He needs to follow certain sets of rules to get success in his/her endeavor of saving the tax.


A buyer is an individual who’s interested in acquiring the property of the taxpayer. The property is known as relinquished property. And it is the capital gain on this property for which the taxpayer defers the taxes.


A seller is someone who’s the owner of the property that the taxpayer wishes to buy. The property that the seller owns is referred to as replacement property in 1031 exchange.

Qualified Intermediary

A qualified intermediary, or a QI, is a party that holds the money after the property has been sold by the taxpayer. A QA uses this money to buy replacement property from the seller. There are some other major roles of QA, like ensuring the process complies with regulations. it also coordinates the documents required for the exchange.

As discussed above, the advisers and real estate agents also play a key role in this process. And, we at FAI Exchange, help the taxpayers by helping them find replacement property in a 1031 exchange.

Fractional real estate investments: Meaning and its benefits

If you are a seasoned real estate, you might be aware of the term ‘fractional real estate investments.’ You can simply consider it as a co-ownership in one or multiple properties by various real estate investors. This type of investment is popular among 1031 exchange investors, who can defer capital gains taxes. For fractional 1031 investments, the IRS has approved two structures: the DST (Delaware Statutory Trust) and TIC (Tenants-In-Common).

Here are some perks of fractional real estate investments that make it a preferred choice.

Get a hold of high-value properties

An investor can get fractional ownership of properties like a medical office complex, multi-unit apartment building, or shopping complex. These types of properties are usually beyond the reach for an individual.

No burden

Handling a property as a landlord is one of the toughest exercises. There are even several books written on how to manage your property as a property. The good news is that you don’t have to manage or maintain your DST investments.

Enjoy stable income

You, as an investor, can examine potential returns and the risks linked to DST properties. This is because the DST properties are usually stabilized assets with active operating histories.

Diversification of real estate portfolio

The structure like DST allows an investor to have a hold of multiple properties. This helps in diversification on the basis of location and property type.

If you are looking Delaware Statutory Trust for 1031 exchange purpose, contact the experts from FAI Exchange. Apart from helping you locate the best DST investments, the experts will guide you through the whole exchange process.

The benefits of real estate investments

Whether real estate investment is a good move or not is something that confuses some real estate investors. Through this blog post, we discuss benefits the real estate investors can enjoy through property investments in Massachusetts.

Real estate is a hard asset

Being a tangible asset, real asset is referred to as “real” or “hard” asset. The hard assets can be utilized to produce other services or goods. This offers an assurance that, even during economic downtimes, they will be of some value.

Cash flow

This is the reason why a lot of investors prefer investing in this type of asset. A real estate investment lets an individual enjoy ongoing monthly income. As the income is mostly passive, you are able to invest your time in core business activities or leisurely purposes.

Tax benefits

When compared to other sources of income, you enjoy more tax benefits with real estate investment. The government offers benefits like low tax-rates for long-term profits and depreciation. You can also defer taxes on capital gains when you plan to sell your property. This can be done through 1031 exchange, in which you have to purchase like-kind property of same or greater value.

Diversification of portfolio

By diversifying your portfolio, you can reduce risks compared to portfolios with only bonds and stocks. You can receive consistent returns by making an investment in assets having low or negative correlation.

If you find investment in real estate somewhat cumbersome, you can choose an easier method. We are talking about DST investments. This is not only a hassle-free process but also allows real estate investments with less money.