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What is a Current  1031 Exchange?

A 1031 exchange allows real estate investors to defer capital gains taxes when they sell a property and reinvest the proceeds into another like-kind property.

Key Benefits of a 1031 Exchange

  • Tax Deferral: Defer paying capital gains taxes.

  • Portfolio Growth: Reinvest all proceeds into bigger or better properties.

  • Diversification: Exchange one property for multiple or different types.

  • Wealth Building: Helps grow long-term wealth without immediate tax burden.

Basic Rules of a 1031 Exchange

  • Like-Kind Property: The replacement property must be similar in nature.

  • 45-Day Rule:  Identify replacement property within 45 days of selling.

  • 180-Day Rule: Must close on the new property within 180 days.

  • Qualified Intermediary: You cannot directly receive the sale proceeds.

​1031 Exchange: With vs Without Comparison

Scenario
Without 1031
With 1031
Reinvestment

$400,000

$500,000
Tax Paid

$100,000

$0 (Deferred)
Property Sale

$500,000

$500,000
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