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Common Types of 1031 Exchanges

The case studies outlined are presented as a representation of the 5 most common types of Section 1031 exchanges. Please note that the case studies have been simplified and several essential steps have been omitted for clarity. Click on the case study you would like to review.

  1. Delayed exchange (existing property) direct format – The most common type of Section 1031 Exchange. The client sells what they have and the replaces with like-kind property.
  2. Delayed/Simultaneous Exchange (Existing Property) Reverse Format (Exchange Last) – The property desired by the Exchange client is parked in a Single Purpose Entity (SPE) until the client’s current property can be sold.
  3. Delayed Build-to-suit Exchange Direct Format – The client gets a Section 1031 Exchange and acquires new, improved property, built-to-suit.
  4. Delayed/Simultaneous Build-to-suit Exchange Reverse Format (Exchange Last) – The property desired by the client is parked in a Single Purpose Entity (SPE) until the client’s current property can be sold. During the parking period, the new property is improved by the SPE to the client’s wishes.
  5. Delayed Exchange (Existing Property) Reverse Format (Exchange first) – The property desired by the client can be purchased immediately by Client, as Client’s old (Relinquished) property is parked in a Single Purpose Entity (SPE) until it can be sold to buyer.
Exchange Type
Case
Description
Delayed exchange (existing property) direct format 1 The client gets the most common type of Section 1031 Exchange
Delayed/Simultaneous Exchange (Existing Property) Reverse Format (Exchange Last) 2 Property desired by the Exchange client is parked in a Single Purpose Entity (SPE) until the client’s current property can be sold.
Delayed Build-to-suit Exchange Direct Format 3 The client gets a Section 1031 Exchange and acquires new, improved property, built-to-suit.
Delayed/Simultaneous Build-to-suit Exchange Reverse Format (Exchange Last) 4 The property desired by the client is parked in a Single Purpose Entity (SPE) until the client’s current property can be sold. During the parking period, the new property is improved by the SPE to the client’s wishes.
Delayed Exchange (Existing Property) Reverse Format (Exchange first) 5 The property desired by the client can be purchased immediately by Client, as Client’s old (Relinquished) property is parked in a Single Purpose Entity (SPE) until it can be sold to buyer.