There are several ways you can exchange your property in 1031 exchange process. Each method will help you defer capital gains taxes.
You might have heard about simultaneous exchange and delayed exchange. So, what exactly is the difference between them?
It is the oldest form of exchange. The properties are swapped directly among two investors. You don’t need a QI for this process. The deeds are literally exchanged in this process, along with other crucial documents. No monetary exchange is involved in this process. It is quite difficult to achieve because you can’t find someone easily with a property whose value is same.
It’s the most common exchange type, as of now. It’s common because the exchanger gets a lot of time to find the property and close it. The proceeds obtained after selling the property are kept by a third party known as a qualified intermediary (QI). These proceeds are used for buying the property you have designated. The exchanger gets 45 days to designate the property and 180 days to close it.
Due to the enormous time received by the exchangers, delayed exchange is usually preferred. There are also other forms of exchange in this process, including improvement exchange, personal property exchange, and reverse exchange.
All these exchange types come with their unique benefits. If you are looking for replacement property in the USA, you can choose them with the help of FAI Exchange.