A "Built-to-Suit Exchange" is a type of 1031 exchange, which refers to a section of the U.S. Internal Revenue Code that allows for the tax-deferred exchange of like-kind properties.
In a Built-to-Suit Exchange, the replacement property is constructed or improved according to the specific needs and requirements of the exchanger (the person or entity initiating the exchange). This type of exchange allows the exchanger to acquire a replacement property that better suits their business needs or investment objectives, while still deferring taxes on any capital gains from the sale of the relinquished property.
To qualify as a Built-to-Suit Exchange, the exchanger must work with a Qualified Intermediary (QI) and follow the rules and regulations of the 1031 exchange process, including identifying replacement properties within 45 days and completing the exchange within 180 days. The improvements to the replacement property must also be completed before the end of the exchange period.
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