In a Construction Exchange (also known as a “Build-to-Suit” Exchange), the exchange proceeds from the relinquished property sale are used to acquire the “parked” property, and to construct improvements on it. The parked property must be held by the EAT until the earlier of the date upon which the improvements have been completed or the combined value of the parked property purchase and the completed improvements equals or exceeds the Target Replacement Value (“TRV”) for the exchange or the 180-day exchange deadline occurs. On or before the 180 th day, the improved property must be transferred to the taxpayer as the replacement property, completing the exchange. These transactions may also be structured as Reverse Construction Exchanges. QI fees associated with both of these exchange types are higher due to their complexity. The TRV is equivalent to the net sale price of the relinquished property, it is the minimum replacement property value a taxpayer must purchase in order to maximize the tax deferral under 1031.
Strategic 1031 Exchange Advisors, LLC, a Georgia limited liability company, is a qualified intermediary for 1031 exchanges only. It is not an accounting firm, law firm or registered investment professional and therefore is not qualified to give accounting, tax, legal or investment advice, and, further, cannot act in an agency capacity on behalf of its clients. This website is for informational purposes only and does not and is not intended to constitute accounting, tax, legal or investment advice. We advise you to consult with your accountant, attorney and investment professional on all matters related to your exchange.