1031 Exchanges
Swap properties, defer taxes, and rapidly scale your real estate empire.
When you sell investment real estate, capital gains tax and depreciation recapture can easily eat 20-30% of your profit. A 1031 Exchange (or Like-Kind Exchange) allows you to defer paying those taxes by reinvesting the proceeds into a new property. This strategy is how successful investors continuously roll equity into bigger, better-performing assets.
The Non-Negotiable Rules
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Like-Kind Property: The new property must also be held for investment or business purposes. (You can't swap a rental for a primary residence).
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45-Day Identification Period: Once you sell, the clock starts. You have exactly 45 days to formally identify potential replacement properties.
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180-Day Closing Period: You must close on the replacement property within 180 days of the sale of your original property.
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No Touching The Cash: An independent Qualified Intermediary (QI) must hold the funds. If the cash hits your personal bank account, the exchange fails and the taxes apply.
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Equal or Greater Value: To defer 100% of the tax, you must buy a replacement property of equal or greater value, and reinvest all cash proceeds. Any cash left over (called "boot") is taxable.
Failed 1031 or "Lazy" 1031 Planning
What happens if the 45-day window passes and you don't find a deal worth buying? Don't panic and force yourself into an over-priced asset just to save on taxes.
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We help clients evaluate whether strategies like Cost Segregation and Bonus Depreciation on *other* existing or newly acquired properties can offset the gains from a failed 1031 exchange. Sometimes paying zero tax doesn't require a 1031 exchange at all—this is often called a "Lazy 1031."