1031 Exchange Guide
Learn how to defer capital gains taxes and grow your real estate portfolio using the powerful 1031 exchange strategy.
100%
Tax Deferral
Defer all capital gains
45
Days to Identify
Replacement properties
180
Days to Close
Complete the exchange
∞
Times Repeatable
No limit on exchanges
Exchange Timeline
Understanding the critical deadlines is essential for a successful 1031 exchange.
Close on Relinquished Property
Sell your current investment property. The exchange period begins.
- Funds go directly to Qualified Intermediary (QI)
- You cannot touch the proceeds
- Exchange agreement must be in place before closing
Identification Period
Identify potential replacement properties in writing to your QI.
Exchange Period
Complete the purchase of replacement property.
Exchange Complete
Successfully defer capital gains taxes on your investment.
Key Requirements
To qualify for tax deferral, your exchange must meet these essential criteria.
Like-Kind Property
Both properties must be held for investment or business use. Personal residences don't qualify.
Equal or Greater Value
Replacement property must be equal or greater value to defer all taxes. Any 'boot' received is taxable.
Qualified Intermediary
Must use a QI to hold funds. You cannot touch the money between transactions.
Same Taxpayer
The same taxpayer who sells must be the one who buys. Entity structure matters.
Important Deadlines
The 45-day identification and 180-day closing deadlines are absolute. There are no extensions except in cases of federally declared disasters. Plan ahead and work with experienced professionals.
Frequently Asked Questions
A 1031 exchange, named after Section 1031 of the IRS Code, allows investors to defer capital gains taxes when selling an investment property by reinvesting the proceeds into a 'like-kind' property. This powerful tax strategy has been used by real estate investors for decades to grow their portfolios while deferring taxes.
Ready to Start Your 1031 Exchange?
Our team can help you navigate the 1031 exchange process and secure DSCR financing for your replacement property.