Transform properties while deferring taxes and maximizing your investment potential.
An Improvement Exchange allows you to reinvest in properties that need renovations or upgrades, leveraging exchange funds to create a property that perfectly aligns with your goals.
At Strategic Property Exchanges, we guide you through the process with expertise, ensuring IRS compliance while helping you build value in your investment.
Improvement & Build-to-Suit Exchange
What Is an Improvement or Build-to-Suit Exchange?
An Improvement Exchange, also known as a Build-to-Suit Exchange, provides investors with a strategic opportunity to transform a property into their ideal investment. It allows for the use of exchange proceeds to make substantial upgrades, renovations, or even ground-up construction on a replacement property—all within the IRS 1031 exchange framework. This is an excellent solution when a perfect replacement property isn't readily available on the market but can be created.
Why Choose This Exchange Type?
- Custom-Built Value: Construct or modify the replacement property to meet your investment criteria or operational needs.
- Increased Potential ROI: Enhanced property features can lead to higher resale value or rental income.
- Flexible Application:
Applies to raw land, underdeveloped properties, or those needing functional or cosmetic upgrades.
Who Benefits Most?
- Real estate investors with a long-term vision.
- Commercial developers aiming to repurpose or redevelop spaces.
- Investors looking to enhance the income-generating potential of a property.
Types of Improvements That Qualify:
- Building additions, structural upgrades, or full renovations.
- Installation of new systems such as HVAC, plumbing, or electrical.
- Exterior improvements including landscaping, parking, or facades.
- Site development or building on vacant land.
Important IRS Rules to Follow:
- Improvements must be made before the exchange deadline.
- The value of the improvements must be included in the total purchase price.
- You must not take possession of the property until the exchange is complete.
How the Process Works:
Sell the Relinquished Property
Place the proceeds with a Qualified Intermediary (QI).
Identify Your Replacement Property and Planned Improvements
Within 45 days, submit written notice of both the property and a detailed list of improvements.
Construct or Improve the Property
All identified improvements must be completed and the final exchange closed within 180 days of the sale.
Strategic Support from Start to Finish: At Strategic Property Exchanges, we take a hands-on approach. From coordinating with contractors and handling paperwork to ensuring compliance with IRS regulations, we help manage the entire process so you can focus on building value. Whether you're modernizing a property or developing from the ground up, we'll help you get it done—on time and within the rules.
Let’s Build Something Better
If your next investment property needs improvements to truly fit your strategy, the Improvement or Build-to-Suit Exchange could be your ideal path. Reach out to us to discuss your goals and how we can bring them to life—strategically.
