Unlock the Full Potential of Your 1031 Exchange
When you understand the key guidelines of a 1031 Exchange, you gain more than just clarity—you gain confidence.
Following the established rules empowers you to make the most of every opportunity, streamline your exchange process, and stay focused on your long-term investment goals. It’s not just about meeting requirements—it’s about leveraging a personalized strategy to grow and diversify your real estate portfolio with purpose.
To successfully defer capital gains taxes, investors need to satisfy the following 1031 exchange rules
1. Purchase a property of equal or greater value.
2. Reinvest all equity in a replacement property.
Note: any equity not reinvested will be subject to tax.
3. Obtain equal or greater debt on the replacement property.
Exception: A reduction in debt can be offset with additional cash from the exchanger.
What is 1031 Exchange Eligible?
1031 Exchange Eligible
- Fractional (tenancy-in-common) interest
- Motels/Hotels
- Single Family Rentals
- Farms/Ranches
- Offices/Commercial
- Multifamily Rentals
- Raw Land
- Leasehold interests of 30 years or more
1031 Exchange Ineligible
- Personal Residence
- Real Estate Investment Trusts (REITs)
- Construction or fix/flips for resale
- Stocks, bonds or notes
- Interests in a partnership
1031 Exchange Timeline
Day 1
Sale of relinquished property -Identification period starts.
Day 45
45 Day Rule = Exchanger has 45 days to identify potential replacement properties and report them to their qualified intermediary.
Day 180
The exchange must be completed no later than 180 days after the sale of the relinquished property. This is the last day to purchase one or more of the replacement properties previously identified.
*Remember: These are calendar days, not business days.
Ways to Identify Replacement Property
Three Property Rule
Identify 3 replacement properties, regardless of their fair market value.
200% Rule
Identify any number of replacement properties, as long as the total fair market value of them does not exceed 200% of the FMV of all the relinquished properties as of the initial transfer date.
95% Rules
Identify any number of replacement properties at any value. The catch: if you select this identification method, you must acquire properties with a combined fair market value of at least 95% of the total value of all properties identified.
