An improvement 1031 exchange may be used when a taxpayer desires to make improvements on the new property. Generally, under this structure, the taxpayer is allowed to use proceeds from the sale of the property they own (the “relinquished” property) for the acquisition and improvement of the property they purchase (the “replacement” property).

The deadlines remain the same as other 1031 exchanges, and the taxpayer must complete the improvement exchange within the 180-day time period.