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When a business owner divests a property and reinvests the proceeds into another, immediate tax obligations are postponed. This strategy allows for the deferral of capital gains taxes associated with the initial property sale

Types of Exchanges

    • Delayed Exchange: The most frequently used exchange. In this scenario, the exchanger usually hires a Qualified Intermediary to handle the funds from selling the original property and to assist in purchasing a new one.
    • Reverse Exchange: This property exchange involves buying the Replacement Property first, followed by selling the Existing Property later. The purchased property must be held by a Qualified Intermediary under a qualified exchange accommodation arrangement.
    • Two-Party Swaps: Also referred to as a Simultaneous Exchange, this is the most straightforward type of exchange. It entails property deed swaps between two owners and is effective when dealing with properties of similar worth. However, if there is debt involved, the process becomes more complex.
    • Improvement Exchange: Also called a Build to Suit Exchange, enables taxpayers to use tax-deferred funds to make enhancements to the Replacement Property.