What it takes to have a successful commercial real estate exchange

Are you planning to change the location of your investment property in the following period? The majority of business managers consider to change the location of their company, because the actual building does not suit their needs anymore. If you are dealing with the same situation, you should think twice before selling your commercial property, because you have the possibility to exchange it, and avoid paying the taxes implied by the selling process. In case you do not have experience, and you have not exchanged a commercial property before, you should ask the help of a company, which facilitates commercial real estate exchange, because they could offer you expert advice, and could assess you during the process for successfully sealing the deal. Also, take notice of some of the following conditions, because you would have to meet them in order to not deal with issues that might ruin the exchange.

Exchange only an investment property, not a personal one

This project is designed to offer support to investors, so if you do not like anymore the house where you are living with your family and you want to change it, you would not have this possibility. 1031 exchange is designed only for commercial properties, but if you are working with a professional company, they could help you convert your personal residence into an investment one, and exchange it, if you want to use it in this purpose in the future.

Like-kind properties qualify only

When thinking about the sense of the word “like-kind” you should not have the misconception that you would have to find a property similar to yours, for being eligible for the swap. It means that the both properties have to be qualified as investment properties, and you even have the possibility to exchange a single building with more different ones. This rule is surprisingly liberal, so ask your advisor about the endless possibilities you can have.

You can delay the exchange

The exchange implies the simple swap of two commercial properties, but you might not find the type of building you want to relocate your business to, from the first look, so the process make take some time. Therefore, you might want to delay the exchange until you find the perfect property. For doing this, you would need a middleman, who would have the role to hold the money obtained from the sale of your property. This person would be the one who would use the money to purchase a new property for you, but the condition is to not ask one of your family members to be the middleman, because it is not accepted. So, once the sale of the first property is closed, the intermediary would receive the money, and you have 45 days to specify which property you want to acquire. You have the possibility to nominate three commercial properties, but the condition is to close on one of them.