There are 4 types of 1031 exchanges:
1. Forward Exchange: In a Forward Exchange, an investor sells a property first, then buys within 180 days.
2. Reverse Exchange: Ina Reverse, an investor buys first, then sells within 180 days. This is done utilizing a “parking arrangement” whereby a Qualified Intermediary holds the replacement property until the relinquished property can be sold.
3. Simultaneous Exchange: A simultaneous buy-sell. These types of exchanges are exceedingly rare.
4. Improvement Exchange – Forward or Reverse: In an Improvement Exchange, sometimes called a Construction Exchange or Build-to-Suit Exchange, an investor invests in the acquired property – which can include repairs, improvements and/ or new construction – using exchange equity. Improvement 1031 Exchanges are used in conjunction with either a Forward Exchange or a Reverse Exchange structure.