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.