A “Build to Suit” exchange, also known as a construction exchange, is a type of 1031 exchange where the taxpayer uses the proceeds from the sale of their relinquished property to construct a new replacement property that is specifically tailored to their needs. This type of exchange allows taxpayers to build a property that meets their exact specifications and requirements, ensuring that it is a perfect fit for their business or personal needs.
On the other hand, a “Rehab to Suit” exchange, also known as an improvement exchange, is a type of 1031 exchange where the taxpayer uses the proceeds from the sale of their relinquished property to make substantial improvements to a replacement property that they intend to use for business or investment purposes. This type of exchange allows taxpayers to improve an existing property to meet their specific needs and preferences, rather than having to start from scratch with a new construction project.
Both “Build to Suit” and “Rehab to Suit” exchanges offer taxpayers the flexibility to create a property that is tailored to their unique needs, while still allowing them to take advantage of the tax-deferred benefits of a 1031 exchange. These exchanges can be complex, and it is important to work with a qualified intermediary and other professionals to ensure that you comply with all IRS regulations and requirements.
At 1031 Exchange Place, we are experts in 1031 exchanges and can guide you through the process of a “Build to Suit” or “Rehab to Suit” exchange, as well as other types of 1031 exchanges.