Types of 1031 Exchanges

In this blog, we review the different ways investors can structure a 1031 Exchange in order to benefit the profitability of their real estate acquisition.

We are pleased to be able to offer three different types of 1031 exchange that you can choose to utilize when it comes to making your next investment purchase. To help you decide which is right for you, here is what you need to know about each of them.

Secure Exchange

When it comes to your money, it is understandable that you want to feel reassured that your finances are in the safest of hands. Our secure 1031 exchange uses a process that is significantly more secure than the industry standard – so much so that we are in the process of patenting it. What makes it superior? Your money is kept securely in a separate account that can only be accessed by you. We can’t touch it, and neither can anyone else until you have passed rigorous security protocols including a signature and telephone identity verification to approve wire transfers. This means that your money doesn’t move until you say it does.

With such superior security, you can rest assured that when you choose a 1031 exchange with us, your money is kept safely under lock and key until the time comes to complete your transaction.

Improvement Exchange

When you buy a property, there will almost certainly be some improvements or construction-based changes that you will wish to make so that it is suitable for your needs. The good news is that if you exchange your current investment property for a like-kind one that is cheaper in value than the one you already own, you can use the difference in value towards whatever improvements you wish to make without incurring tax on it.

Under normal rules, if you were to sell a property worth $100k and replace it with a like-kind one that only costs $90k, you would eligible to pay capital gains tax on the $10k that you would have left. This isn’t the case if you choose to spend it on improvements. There are even ways in which you can improve the property that you currently own.

Unsurprisingly, there strict rules and requirements that must be met. Our experienced team can help you circumnavigate any potential pitfalls and ensure you get the best deal on your exchange.

Reverse Exchange

The property market can move very quickly, and if you find the perfect investment but the seller needs to close in a hurry, it can be very frustrating if you don’t have in the funds in place to act. Fortunately, a reverse 1031 exchange can make it possible to secure the property that you are looking for without first needing to sell the one you already own. There are several options for doing this:

  • Using the cash from available funds or refinancing.
  • Using a traditional mortgage, whereby the title of the relinquished property is deeded to the accommodator before the close of escrow on the replacement property.
  • Through finance, although this is quite rare since many lenders still do not understand the way that the 1031 exchange works.


Nevertheless, if you have found a property that you need to purchase quickly, our experienced team can help you to find the best way to secure it via a 1031 exchange.

Ready to get started?

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.