Maximizing Your Investment Portfolio with Improvement Exchanges

Maximizing Your Investment Portfolio with Improvement Exchanges

MAXIMIZING YOUR INVESTMENT PORTFOLIO WITH IMPROVEMENT EXCHANGES

By Juno Kenny, VP, Exchange Manager, Genesis Bank

At Genesis Bank Exchange, we recently completed an Improvement Exchange (also known as a Build-to-Suit Exchange or Construction Exchange) that exemplifies the strategic advantages of this 1031 Exchange structure. Our client, with three separate relinquished properties totaling $55 million in value, rolled into one replacement property valued at $49.5 million. Through this exchange, the client utilized the remaining $6 million in exchange funds to make improvements to their replacement property.

In a market with limited options at the time, the Improvement Exchange structure provided our client with a larger selection of replacement properties to choose from and the flexibility to use the exchange funds for improvements. By taking the time to plan out potential improvements prior to the sale of the relinquished properties, our client was able to maximize the use of their exchange funds and ensure that all improvements were completed within the 1031 Exchange timeframe.

Improvement Exchanges offer several key benefits for investors looking to enhance their investment portfolios:

  • Flexibility: The ability to use exchange funds for improvements provides flexibility in selecting replacement properties and enhancing their value.
  • Increased Options: In markets with limited inventory, Improvement Exchanges offer a broader range of replacement properties to choose from, increasing the likelihood of finding a suitable investment.
  • Tax Deferral: Like all 1031 Exchanges, Improvement Exchanges allow investors to defer capital gains taxes on the sale of their relinquished properties, providing more capital for investment.
  • Maximizing Potential: By planning improvements in advance, investors can ensure that all necessary upgrades are completed within the exchange timeframe, maximizing the property’s potential.

Our team of experts at Genesis Bank Exchange is here to help you navigate the complexities of 1031 Exchanges and maximize the potential of your investments. If you’re interested in learning more about Improvement Exchanges and how they can benefit your investment portfolio, connect with the Genesis Bank Exchange team by calling 800.797.1031, or explore further details on our website: https://www.mygenesisbank.com/1031Exchange.