The first step in this type of transaction is still the sale of the relinquished property. Once this is accomplished, the next step is the acquisition of the ground on which the improvements will be built. Because the price of the lot is usually below the required value needed to defer all of the gain, it becomes important to structure the transaction in a manner that allows the improvement value to be counted toward the replacement acquisition value.

Our affiliate company, ADE Holdings, LLC, provides accommodation titleholder (AT) services and will acquire the lot that is targeted to be improved. We make arrangements with the investor to hire a third-party contractor who will make the improvements. We then fund the cost with exchange proceeds and outside debt (if needed). When the desired value is reached or the 180-day exchange period has ended, the AT sells the improved lot to the investor at the higher, improved price allowing more or all of the gain to be deferred.