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1031 Exchange Services

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This article will offer you with a really short and concise introduction of Build-To-Suit 1031 Exchange deals. Build-To-Suit 1031 Exchange structures are also described as Improvement 1031 Exchanges or Construction 1031 Exchanges. These 3 names all describe the exact same 1031 Exchange technique that allows you to utilize the earnings from the sale of your relinquished residential or commercial property to purchase your replacement residential or commercial property but likewise pay for to enhance your gotten replacement residential or commercial property.


Build-To-Suit 1031 Exchange deals are intricate tax-deferred techniques. You ought to constantly seek the recommendations of your legal and tax counsel before getting in into any Build-To-Suit Exchange transaction. Exeter 1031 Exchange Services, LLC is constantly available to deal with you and your consultants in preparing your Build-To-Suit 1031 Exchange.


Build-To-Suit 1031 Exchanges


The Build-To-Suit Exchange enables you to structure a 1031 Exchange transaction where you can offer your relinquished residential or commercial property and use the earnings from the sale of your given up residential or commercial property to acquire replacement residential or commercial property. It also allows you to utilize any excess sale proceeds to improve the obtained replacement residential or commercial property as part of your 1031 Exchange transaction.


The proceeds from the sale of your relinquished residential or commercial property that are utilized toward the acquisition of your replacement residential or commercial property along with those earnings that are paid or used for improvements to your replacement residential or commercial property will qualify for tax-deferred exchange treatment supplied the transaction is structured effectively as a Build-To-Suit Exchange.


Build-To-Suit 1031 Exchanges are structured as either a Forward Exchange or a Reverse Exchange. These are significantly more complex 1031 Exchange deals and should just be administered by a Certified Intermediary, such as Exeter 1031 Exchange Services, LLC that has considerable experience and know-how with Build-To-Suit Exchanges.


Build-To-Suit Exchange With a Forward 1031 Exchange


Forward 1031 Exchange deals can be structured to make the most of the Build-To-Suit 1031 Exchange strategy. This combined 1031 Exchange technique permits you to sell your relinquished residential or commercial property first and then consequently identify and get replacement residential or commercial property as well as make enhancements to your replacement residential or commercial property as part of your 1031 Exchange transaction.


The identification of the replacement residential or commercial property and the enhancements to be made to the acquired replacement residential or commercial property, along with the real closing on the replacement residential or commercial property, must be carried out and finished within the recommended 1031 Exchange deadlines.


Build-To-Suit Exchange With a Reverse 1031 Exchange


Reverse 1031 Exchange transactions can also be structured to make the most of the Build-To-Suit 1031 Exchange technique. This combined Reverse and Build-To-Suit 1031 Exchange technique permits you to get your replacement residential or commercial property initially and likewise enhance the acquired replacement residential or commercial property throughout the time that you're trying to sell your existing given up residential or commercial property.


The improvements that are to be made to the obtained replacement residential or commercial property, as well as the real transfer of the replacement residential or commercial property with the finished improvements to you from the Exchange Accommodation Titleholder (see comments below), should be performed and finished in combination with the closing of the sale of your given up residential or commercial property within the recommended 1031 Exchange due dates.


No matter which integrated technique you pick, the Build-To-Suit 1031 Exchange permits you to get your replacement residential or commercial property and use a few of your 1031 Exchange funds to enhance your gotten replacement residential or commercial property on a tax-deferred basis offered the proper parking structure has actually been taken into place.


Parking Arrangement Pursuant to Revenue Procedure 2000-37


The replacement residential or commercial property can not be obtained and held directly by you while the enhancements or remodellings to the residential or commercial property are being finished. Legal title to your replacement residential or commercial property must be acquired and held or "parked" by an Exchange Accommodation Titleholder (Exeter Reverse 1031 Exchange Services, LLC) in order to properly structure a Build-To-Suit 1031 Exchange transaction and receive tax-deferred exchange treatment.


This "parking plan" is detailed and permitted pursuant to Revenue Procedure 2000-37. The Irs provided Rev. Proc. 2000-37 on September 15, 2000, which provides assistance on how to properly structure a Build-To-Suit 1031 Exchange deal by utilizing a parking arrangement in combination with either a Forward 1031 Exchange or a Reverse 1031 Exchange.


The Parking Arrangement


You will participate in a contract called the Qualified Exchange Accommodation Agreement or "QEAA" that will define and structure the parking plan to be utilized for your Build-To-Suit Exchange transaction. The QEAA is in by and between you and Exeter Reverse 1031 Exchange Services, LLC as your Exchange Accommodation Titleholder or "EAT".


The Exchange Accommodation Titleholder or "EAT" is (and always need to be) a different legal entity apart from the Qualified Intermediary. The EAT will buy and hold or "park" legal title to your replacement residential or commercial property throughout your Build-To-Suit 1031 Exchange transaction through an unique function entity frequently referred to as an "SPE."


Special Purpose Entity


Exeter Reverse 1031 Exchange Services, LLC, which functions as your Exchange Accommodation Titleholder or "EAT", will set-up an unique purpose entity or "SPE" in the type of a single member limited liability business or SMLLC that will be used solely to acquire and hold or "park" title to your replacement residential or commercial property during your Build-To-Suit 1031 Exchange.


The formation of this special purpose entity is vital in order to safeguard you and your replacement residential or commercial property from liens, judgments and other legal issues stemming from other customers' parked residential or commercial properties. The SPE makes sure that your parked residential or commercial property will never ever be kept in an entity that likewise holds legal title to other clients' parked residential or commercial properties.


Build-To-Suit 1031 Exchange Deadlines


Deadlines to finish your Build-To-Suit Exchange are the very same as a Forward 1031 Exchange or a Reverse 1031 Exchange transaction, depending upon which structure you have actually chosen to integrate with your Build-To-Suit Exchange.


The 45 and 180 calendar day deadlines are the same. You have 45 calendar days to recognize the suitable residential or commercial property, again depending upon which structure you have actually selected, and you have an extra 135 calendar days - for an overall of 180 calendar days - to complete your Build-To-Suit 1031 Exchange transaction.


Build-To-Suit Exchange Fees and Costs


Build-To-Suit 1031 Exchanges are more complex and pricey structures, so you require to examine the quantity of depreciation recapture and capital gain income tax liabilities being accepted ensure that the expense of the Build-To-Suit 1031 Exchange deal is warranted.


Exeter 1031 Exchange Services, LLC would be happy to offer you with a written charge quote so that you understand exactly what your Build-To-Suit 1031 Exchange fees and expenses will be prior to getting going with your deal.


Starting


This article has been a really quick, fundamental and succinct summary of Build-To-Suit 1031 Exchange transactions. You can click here for more details on how you can get going if you are prepared to proceed with a Build-To-Suit Exchange or click here to contact among our 1031 Exchange Advisors for assistance.