🔁 How a 1031 Exchange Works

1. Sell Your Investment Property: Close on your rental, commercial property, or land.
2. Funds Held by Qualified Intermediary: A QI holds the proceeds—never you directly.
3. Identify Replacement Property (45 Days): Formally identify up to 3 like-kind options.
4. Close on New Property (180 Days): Complete the purchase to qualify.
5. Taxes Deferred: Reinvest full proceeds without capital gains tax (for now).

💼 Benefits of a 1031 Tax Exchange

• ✅ Defer Capital Gains Tax
• ✅ Grow and Scale Your Portfolio
• ✅ Diversify or Consolidate Investments
• ✅ Reallocate to Better Markets
• ✅ Build Long-Term Wealth

🔍 What Qualifies as a “Like-Kind” Exchange?

“Like-kind” is broadly defined. You can exchange nearly any real estate held for investment, such as:

• Residential rentals for commercial buildings
• Vacant land for an apartment complex
• Office space for industrial property

Note: You cannot exchange a personal residence.

📅 1031 Exchange Timeline Flowchart

❓ Frequently Asked Questions

Can I use a 1031 Exchange for my home?

No. It must be for investment or business property.

What happens if I don’t reinvest all proceeds?

Any cash not reinvested (“boot”) is taxable as capital gains.

Can I exchange into multiple properties?

Yes, you can diversify your reinvestment if done correctly.

Can I do this more than once?

Absolutely. Many investors use 1031 Exchanges repeatedly.

📞 Ready to Maximize Your Profits?

If you’re planning to sell an income property, a 1031 Exchange could save you thousands in taxes. Let’s talk about your best strategy.

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