Compare selling outright vs. a 1031 tax-deferred exchange. See exactly how much you save in taxes and how much more you can reinvest.
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Ready to execute a 1031 exchange? Our advisors coordinate QI, lender, and timeline to ensure a smooth exchange.
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The most powerful tax deferral strategy in real estate investing.
Section 1031 of the IRS code allows you to defer all capital gains and depreciation recapture taxes by reinvesting sale proceeds into a "like-kind" replacement property. The tax is deferred, not eliminated — but many investors do serial 1031s and ultimately pass properties to heirs with a stepped-up basis.
45 days after closing to identify up to 3 replacement properties (or more under special rules). 180 days to close on the replacement property. A Qualified Intermediary (QI) must hold the proceeds — you can never touch the cash. Missing either deadline triggers full taxation.
Any real property held for investment or business can exchange for any other real property. Apartment to office, retail to industrial, land to building — all qualify. Personal residences and property held primarily for sale (dealer property) do NOT qualify.
"Boot" is any cash or non-like-kind property received in the exchange. Boot is taxable. If you sell for $2M and only reinvest $1.8M, the $200K boot is taxed. To fully defer, the replacement property must be equal or greater in value, and all equity must be reinvested.
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Common questions about 1031 exchanges.
A 1031 exchange (named after IRS Section 1031) allows you to defer capital gains and depreciation recapture taxes by selling an investment property and reinvesting the proceeds into a like-kind replacement property within strict timelines. The tax is deferred, not eliminated.
45 days to identify replacement properties and 180 days to close. Both deadlines run from the closing of your relinquished (sold) property. Missing either deadline means the entire gain becomes taxable. A Qualified Intermediary must hold proceeds throughout.
No. 1031 exchanges only apply to property held for investment or use in a trade/business. Personal residences do not qualify. However, you can convert a rental property to a primary residence (with some limitations) or vice versa under certain conditions.
A QI is a neutral third party who holds your sale proceeds during the exchange. You cannot touch the cash at any point. Using a related party or your attorney as QI can disqualify the exchange. Choose an established QI with proper insurance and escrow protections.
Yes. You can identify up to 3 replacement properties regardless of value (the Three Property Rule), or any number as long as their combined value does not exceed 200% of the relinquished property value (the 200% Rule).
We coordinate the entire process: connecting you with Qualified Intermediaries, timing the sale and purchase, and arranging financing on the replacement property. Our advisors ensure you meet all deadlines and maximize your reinvestment power. No upfront fees.
Our advisors help you execute 1031 exchanges seamlessly — coordinating the sale, QI, and replacement property financing in one process.
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