Tax Deferred Construction Exchanges

Exchangers sometimes need to acquire property on which they will build improvements or renovations that they wish to include as exchange replacement property. Improvements on land an exchanger has already acquired will not count as replacement property in a 1031 tax exchange. By utilizing an “Improvement or Construction Exchange” it would be possible for an exchanger to receive property in a tax deferred exchange that is renovated, improved to the exchangers specifications. In an “Improvement or Construction Exchange”, proceeds from the relinquished property sale are received and held by Bankers Escrow Corporation as provided by IRS rules. Transfer of the completed replacement property is made within 180 days after the relinquished property sale. Funds from the relinquished property are used to supplement other financing which permits both the purchase and construction of improvements on the replacement property. It is necessary that all improvements and funds be utilized within the 180 day period after the sale of the relinquished property. An improvement or construction exchange can allow an exchanger to both acquire and improve property and save capital gains tax. Bankers Escrow Corporation has accommodated many successful improvement and construction exchanges. Fees are determined upon the complexity of the transaction.  Call an exchange specialist at 800-571-6595 to discuss your construction tax exchange.