Ten31 Texas, LLC

Why Choose a 1031 Improvement Exchange? A 1031 Improvement Exchange can be a great way for property investors to turn what would otherwise be a partial exchange “with Boot” into a full Exchange which defers capital gains tax. Boot refers to the excess cash created when a Replacement Property is purchased for a lower price than the Relinquished Property is sold for, and this difference is taxable. However, if the Replacement Property is a candidate for Improvements that can be completed within the 180-day 1031 Exchange timeline requirement, a 1031 Improvement Exchange can be used. To take full advantage of a 1031 Improvement Exchange, investors often focus on efficiently using up the excess cash for improvements that will add the most value to the property, such as clearing land, enhancing driveways, adding or repairing fencing, replacing roofs or remodeling the interior. Note, when determining where to focus, investors need to consider that improvements which require complex planning or permitting can be difficult to accomplish in a limited time frame.