A construction improvement exchange is a like-kind exchange laid out in the Internal Revenue Code. It allows a person to make improvements to their replacement property within the 1031 exchange period. Give our New York 1031 exchange intermediaries a call today to discuss your exchange –877.373.1031.
What is an Improvement Exchange?
A construction improvement exchange (aka a “build-to-suit” exchange) is a particular type of like-kind exchange in which the exchangor constructs improvements to their replacement property before closing on it. Why would someone want to do that, you might ask? Well, if you have any experience in real estate, you know that finding the perfect property can be difficult – sometimes it can even seem impossible.
When someone buys a home, for example, it typically doesn’t come exactly as the buyer wants it. They may change the carpet, or pain the walls, or construct an addition to suit their needs. The same is true in commercial real estate and 1031 exchanges. But a construction exchange allows the taxpayer to get the property they want and still avail themselves of the tax-saving benefits of a like-kind exchange. So you can exchange out of an apartment complex in the Bronx and into a motel in upstate New York, and make some construction improvements to your new replacement property before closing.
Construction Exchange Rules
There are a few rules and restrictions that go along with a New York construction exchange (as there are with any like-kind exchange):
- Timing. First, you have to complete your exchange within 180 days after selling your relinquished property. That means that you have to identify your new property and finish any construction on it within that 180 day period.
- Like-Kind. Your property also needs to be like kind. With real property that basically means any real estate within the US.
- Qualifying Purpose. Your property also has to be held for business use (not personal use) in order to qualify for 1031 treatment.
New York 1031 Improvement Exchange Company
If you are interested in conducting a construction improvement exchange in New York, contact our qualified intermediaries. Our New York 1031 exchange professionals have decades of experience helping taxpayers facilitate their exchanges. We can answer your questions, prepare your documents, and walk you through the entire process. Give us a ring today to discuss your exchange –877.373.1031.