What Is a 1031 Exchange and How It Can Help You Defer Taxes
Sell your property, reinvest the proceeds — no capital gains tax upfront.
What is a 1031 Exchange
This exchange is named after Section 1031 of the U.S. Internal Revenue Code, and it’s commonly used by investors to grow their real estate portfolios faster and more efficiently.
Keep your money working for you instead of paying taxes upfront.
How a 1031 Exchange Works
A 1031 Exchange allows you to sell one investment property and reinvest the proceeds into another like-kind property, deferring capital gains taxes.
Here’s the process in simple steps:
1
Sell your property
You sell your current investment or business property.
2
Qualified Intermediary holds the funds
A trusted third party (Qualified Intermediary) temporarily holds the sale proceeds — you never directly touch the money.
3
Identify replacement property within 45 days
You have 45 days from the sale to identify one or more potential replacement properties.
4
Complete purchase within 180 days
You must close on the replacement property within 180 days of the original sale date.
Why Use a 1031 Exchange?
A 1031 Exchange helps real estate investors defer paying capital gains taxes, allowing them to keep more money working in their investments. By reinvesting proceeds from one property into another, you can grow your portfolio faster and more efficiently without losing capital to immediate tax payments.
This strategy is ideal for those who want to maximize investment potential and maintain financial flexibility in the real estate market.
Key Benefits of a 1031 Exchange
Tax Deferral
Delay paying capital gains taxes, so your money stays invested longer.
Full Reinvestment
Use all sale proceeds to buy new property without tax deductions.
Investment Flexibility
Easily upgrade, consolidate, or diversify your real estate holdings.
What You Need to Know Our Work
1031 Exchanges offer big advantages — but they also come with strict rules. Here are a few key points to remember:
Deadlines Matter
You must identify a new property within 45 days and close within 180 days. No extensions.
You Need a Qualified Intermediary
You can’t receive the sale proceeds yourself — they must go through a third-party intermediary.
Not for Personal Use
Primary residences and properties held for quick resale don’t qualify.
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