Exchange types

 A forward exchange is the most common type of 1031 exchange, where a taxpayer sells a relinquished property first and then acquires a replacement property within the IRS-mandated timeframes. 

The key requirements are:

• The replacement property must be identified within 45 days of selling the relinquished property.
• The acquisition of the replacement property must be completed within 180 days of the sale.
• A qualified intermediary (QI) must hold the proceeds from the sale to maintain tax-deferred status.

This structure allows investors to defer capital gains taxes while reinvesting in like-kind property.  

A reverse exchange is a 1031 exchange in which an investor acquires the replacement property before selling the relinquished property. This is the opposite of a forward exchange and is typically used when a desirable replacement property becomes available before the investor can sell their current property.

Key Features of a Reverse Exchange:

• The IRS requires a qualified intermediary (QI) or exchange accommodation titleholder (EAT) to temporarily hold the replacement or relinquished property to ensure the investor does not take constructive receipt. 
• The relinquished property must be sold within 180 days after acquiring the replacement property to qualify for tax deferral. 
• The replacement property must be properly identified within 45 days of acquiring it. 
• Reverse exchanges are more complex and often require additional financing since the taxpayer must purchase the new property before receiving sale proceeds from the old property.

 A Build-to-Suit Exchange (also known as an Improvement Exchange or Construction Exchange) is a type of 1031 exchange that allows an investor to use exchange proceeds to construct, renovate, or improve the replacement property while still deferring capital gains taxes.

Key Features of a Build-to-Suit Exchange:

• The replacement property, including improvements, must be identified within 45 days of selling the relinquished property. 
• The entire exchange, including construction, must be completed within 180 days of  he sale of the relinquished property. 
• A qualified intermediary (QI) or exchange accommodation titleholder (EAT) must      temporarily hold the replacement property while improvements are made. 
• Only improvements completed within the 180-day window count toward the property's exchange value for tax deferral purposes. 

This structure is ideal for investors who want to acquire a property that needs upgrades or modifications before taking ownership.