Improvement 1031 exchanges enable an investor to defer capital gains taxes by using the proceeds from the sale of the Relinquished Property both to purchase and then to make capital improvements on the new Replacement Property. Similar to a Reverse 1031 Exchange, title to the Replacement Property must be vested in the Qualified Intermediary through what’s known as an Exchange Accommodation Titleholder entity during the period exchange funds are used to pay for capital improvements. This strategy, also known as a “build-to-suit” or “construction” exchange, enables investors to customize their Replacement Property, potentially increasing its value and suitability for their needs using 1031 funds within the framework of several strict rules.