The four types of Exchanges

1. Simultaneous Exchange - A simultaneous exchange occurs when the relinquished (sale) property and the replacement (acquired) property are transferred concurrently. Contrary to popular opinion, an intermediary is still necessary to safeguard the exchange. The Qualified Intermediary creates the reciprocal trade by receiving the proceeds of the relinquished property and acquiring the replacement property. The Intermediary also provides the paper trail validating the flow and structure of the transaction and ensures the compliance with Treasury Regulations.
    
2. Delayed Exchange - The sale of the relinquished property occurs in advance of the replacement property. The delayed exchange is the most universal exchange, safely providing Exchangers with flexibility in in the acquisition of replacement property or properties.
    
3. Improvement (Build-to Suit) Exchange - The taxpayer can choose to make repairs or add structural improvements as part of the replacement property. While these types of exchanges can be complicated and cumbersome, they can alleviate cash-flow and exchange residual issues. The process begins when the taxpayer identifies the improvements to be made during the identification period. Prior to the close of the replacement property, the Qualified Intermediary will take title to the land or partially improved land on which the improvement will be built, and contract for the repairs or construction. There are restrictions on how the sale funds can be handled, the time periods for completion of the work, and conveyance of the improved real property.
    
4. Reverse Exchange - The replacement property is acquired before the relinquished property is sold. The newly issued Revenue Procedure (REV. Proc.2000-37) provides a safe harbor for reverse and reverse build to suit exchanges entered into on or after September 15, 2000.