A reverse 1031 exchange, which is sometimes referred to as a "parking arrangement," occurs when a taxpayer acquires a Replacement Property prior to disposing of their Relinquished Property. A pure reverse exchange, where the taxpayer owns both the Relinquished and Replacement properties at the same time, is not allowed. The actual acquisition of the "parked" property is done by an Exchange Accommodation Titleholder or parking entity.

In a typical 1031 Reverse Exchange, the "Exchange Accommodation Titleholder" takes title to or "parks" the replacement property and holds it until the taxpayer is able to sell the relinquished property. The taxpayer then exchanges with the Exchange Accommodation Titleholder, who now owns the replacement property. An exchange structured within the safe harbor of Rev. Proc. 2000-37 cannot have a parking period that goes beyond 180 days.

The build-to-suit exchange is also known as a construction or improvement exchange. It is a tax deferred exchange where the Qualified Intermediary acquires fee ownership to the replacement property and makes improvements to it. Once the necessary improvements are completed within the exchange time period which is 180 days, ownership is then transferred to the Exchanger and the exchange transaction is completed. This exchange variation gives investors more flexibility, thus providing the opportunity to either improve an existing property or even construct a new replacement property.