Kevin Levine, a 1031 exchange expert and Vice President of Accommodator Finance Company, has written several brief articles that explain the benefits of the 1031 exchange process.  His latest article, which discusses the benefits of an Improvement Exchange, will be featured on his company's website as well as being released in a national real estate investment magazine. 

In this brief synopsis, Levine gives solid strategies for seasoned real estate investors as well as new investors.  

Still adhering to the basic 1031 exchange protocol, an improvement exchange also known as a construction or build to suit allows the investor to buy a replacement property with a portion of the exchange proceeds, or tax-deferred funds, from the sale of the relinquished property.  The replacement property, however, must have improvements made to it before it is acquired by the exchanger.  The advantage of an improvement exchange, then, is that "tax-free dollars" are used to make improvements on the property based on the investor's specifications.  Any planned improvements must be completed within the 180-day exchange period in order for the property to be considered for a full tax deferral. 

For capital gains to be completely deferred, the exchange value of the replacement property that is to be received by the investor must equal or exceed the exchange value of the relinquished property.  The investor should note that the exchange value of the replacement property is determined based upon the date that he/she receives title and only the value of any improvements made to the replacement property before its conveyance to the investor is permitted to be included in its exchange value. 

So the clear benefit of the improvement exchange process is taking the exchange proceeds from the sale of the relinquished property to acquire and improve the replacement property without paying capital gains taxes.

Accommodator Finance Company is a nationally recognized Qualified Intermediary that specializes in providing successful tax solutions for all types of exchange scenarios.  Run by a group of skilled real estate professionals, it offers a variety of exchange services that enables its clients to capitalize on a wide range of market opportunities.  Accommodator Finance Company is a proud member of the Federation of Exchange Accommodators (FEA).