Which 1031 Exchange Is Right for Me?

Leverage these insights to calculate which exchange strategy best fits your portfolio and financial strategy.

Investors are sometimes confused about the best use cases for the standard exchange, reverse exchange, and improvement exchange models of the 1031 Exchange. Here, we will delineate the best uses for each, as well as criteria for determining which exchange model works best for your portfolio. In this article, we will help you answer each of these questions for yourself:

  • Is the standard exchange for me?
  • Is the reverse exchange for me?
  • Is the improvement exchange for me?

Is The Standard Exchange for Me?

The Standard Exchange is the best option for those with a straightforward exchange strategy. This is most commonly used by property used by property owners who want to directly exchange one property for another without paying capital gains taxes. The standard exchange is a simple sequence in which the exchanger sells their relinquished property first and purchased the acquired property second. In the 180-day period after the relinquished property’s closing date must occur, the the qualified intermediary takes custody of the relinquished property’s funds and applies them to the purchase of the qualifying identified property in order to acquire this property with tax-free exchange funds, in compliance with IRS Section 1031, which states that exchangers cannot directly receive tax-free funds from a 1031 Exchange.

Is the Reverse Exchange for Me?

The reverse exchange is best for property owners who want to purchase a property first and sell properties they currently own within 180 days of the closing date of the acquired property. This sometimes serves investors who have an expiring opportunity that can’t wait for the sale of current properties.

Is the Improvement Exchange for Me?

The improvement exchange is best for owners who want to include improvements, construction, or additions to the acquired property with tax-free proceeds from the relinquished property sale.


When deciding whether to pursue a reverse exchange or a standard exchange, it is best to consult a professional. Schedule a free consultation with one of our qualified experts today

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We know that 1031 exchanges, real estate financing, and everything in between can be confusing, and a 10 minute phone call can help clear things up. So give us a call or schedule a consultation today, and we’ll be happy to talk through your specific needs.