Alan Young
Your 1031 Real Estate Exchange Specialist
1031 exchanges can be confusing for investors. We’re changing that.
What Is a 1031 Exchange?
A 1031 Exchange, named after Section 1031 of the U.S. Internal Revenue Code, is a tax-deferral strategy that allows real estate investors to sell one investment property and reinvest the proceeds in a new property while deferring capital gains taxes. This is often referred to as a “like-kind” exchange.
1031 Exchanges are commonly used by real estate investors who are looking to grow their portfolios, consolidate properties, or shift into different types of real estate investments.
How Does a 1031 Exchange Work?
Like-Kind Property
The properties involved in the exchange must be of “like-kind,” meaning they must be of the same nature or character, even if they differ in grade or quality. For real estate, this generally means any real property held for investment or business purposes can be exchanged for any other real property held for investment or business.
Timing Rules
Identification Period
The investor must identify potential replacement properties within 45 days of selling the original property.
Exchange Period
The new property must be purchased within 180 days of the sale of the original property.
Qualified Intermediary
A third-party intermediary, known as a Qualified Intermediary (QI), is required to facilitate the exchange. The QI holds the sale proceeds from the original property and uses them to purchase the new property, ensuring that the investor never takes possession of the cash.
Tax Deferral
By completing a 1031 Exchange, the investor defers paying capital gains taxes on the sale of the original property. The taxes are deferred, not eliminated, and will be due upon the eventual sale of the replacement property unless another 1031 Exchange is performed.
Potential Benefits
Portfolio Growth
Investors can use 1031 Exchanges to upgrade or diversify their real estate holdings without an immediate tax burden.
Tax Efficiency
By deferring taxes, investors can reinvest the full sale proceeds into a new property, potentially increasing their buying power.
Where We Work Nationwide
Durango, CO; Farmington, NM; San Francisco, CA; New York, NY; Los Angeles, CA; Seattle, WA; Washington, DC; San Jose, CA; Boston, MA; Denver, CO; Austin, TX; Miami, FL; Portland, OR; Dallas, TX; Houston, TX; Atlanta, GA; Philadelphia, PA; San Diego, CA; Chicago, IL; Minneapolis, MN; Detroit, MI; Phoenix, AZ; Las Vegas, NV; Salt Lake City, UT; Baltimore, MD; Tampa, FL; Sacramento, CA; Orlando, FL; Nashville, TN; Raleigh, NC; St. Louis, MO; Charlotte, NC; Pittsburgh, PA; Indianapolis, IN; Kansas City, MO; Columbus, OH; Milwaukee, WI; Cincinnati, OH; Cleveland, OH; San Antonio, TX; Louisville, KY; Buffalo, NY; Richmond, VA; Rochester, NY; Hartford, CT; Providence, RI; New Orleans, LA; Jacksonville, FL; Memphis, TN; Birmingham, AL; Oklahoma City, OK.