Investor Resource
1031 Tax-Deferred Exchange
One of the most powerful tax-deferral tools available to real estate investors — and one of the most misunderstood. Here’s what you need to know before your next transaction.
Current legislative status — July 2025
Section 1031 Like-Kind Exchanges remain fully intact. The “One Big Beautiful Bill” signed into law on July 4, 2025 — which contained significant tax code changes — excluded Section 1031 entirely after sustained industry advocacy. Despite proposals over multiple years to cap or eliminate the benefit, 1031 exchanges remain available to real estate investors in their current form. The core rules on this page are current and accurate as of the date of publication.
The critical deadlines
45 Day Rule
From the date you close on the relinquished property (the one you’re selling), you have exactly 45 days to identify potential replacement properties in writing. This deadline is strict — there are no extensions for circumstances short of a federally declared disaster.
180 Day Rule
The entire exchange must be completed — meaning you must close on the replacement property — within 180 days of selling the relinquished property. Both the 45-day and 180-day clocks start running simultaneously on the day of the relinquished property closing.
Qualified Intermediary
A Qualified Intermediary (QI) — also called a facilitator or accommodator — must hold the sale proceeds between transactions. If you receive the funds directly at any point, the exchange is disqualified. Selecting an experienced, reputable QI is one of the most important decisions in the process.
Important — the tax filing deadline rule
For exchanges initiated after October 18, 2024, the 180-day exchange period may be shortened by your tax return due date. If the 180-day period would extend past April 15 of the following year, you must close on the replacement property by your tax filing deadline — not the end of the 180-day window — unless you file for an extension. Filing an extension restores the full 180-day period. If you’re closing on a relinquished property in the fourth quarter of any year, discuss this with your QI and tax advisor before proceeding.
Important change since 2018 — real property only
Since the Tax Cuts and Jobs Act took effect in 2018, Section 1031 applies only to exchanges of real property — not personal property, equipment, vehicles, artwork, or other tangible assets. Prior to 2018, certain personal property exchanges also qualified. The property lists and examples on this page reflect the current law. If you’re exchanging anything other than real estate, consult a tax professional — it will not qualify under Section 1031.
Full resource — additional detail below
1031 Tax-Deferred Exchange
See also TIC Investments
1031 Exchange = Use your money to leverage your investments instead of paying capital gains taxes each time you buy or sell real estate.
Need a Property to Complete Your 1031 Exchange?
The 1031 tax deferred exchange is also referred to as a Starker exchange, a like-kind exchange, a like-kind swap, a real-estate swap, real estate exchange, delayed exchange, simultaneous exchange, construction exchange, improvement exchange, multi-property exchange, multi-party exchange, and sometimes even a ‘starker’ – in honor of T.J. Starker, whose pioneering lawsuits give us the advantages we enjoy today through Internal Revenue Code (IRC) 1031.
No matter how you refer to it, a 1031 Tax Deferred Exchange can be an investor’s best friend. The IRS rules allow real estate investors to defer paying taxes on qualifying ‘exchanges’ provided the investor meets a few criteria and uses a qualified intermediary (sometimes called a facilitator or accommodator.)
Who should use a 1031 tax deferred exchange?
Any real estate investor who is contemplating buying or selling an investment property.
Properties that may qualify for a 1031 exchange
· Apartment
· Duplex
· Triplex
· Fourplex
· Rental House
· Commercial Property
· Unimproved Property, Land, Vacant Lots
· Multiple Properties
· 30-Year Leases
Properties that do NOT qualify for a 1031 exchange
· Primary Residences
· Vacation Homes
· Second Homes
· Stocks, Bonds, or Notes
· Stock in Trade or Other Property Held Primarily for Sale
· Other Securities or Evidence of Indebtedness
· Certificates of Trust or Beneficial Interest
· Partnership Interests
· And a few other exclusions
About 1031 Tax Deferred Exchange
Tax deferred exchanges have been around since the 1920s, but became more accessible to investors in 1979 following several court cases, thanks to T.J. Starker. Following those court cases, a 1031 exchange became far less complicated and certainly more ‘popular’.
Like-Kind Properties
Many people mistakenly believe that by using a 1031 exchange, the exchangor has to swap their property for a similar property at the same time. In the old days, that was the case – corporations would literally trade one deed for another and the properties truly did have to be nearly identical.
HOWEVER, currently, the rules regarding LIKE-KIND are more concerned with the intent of the investor more so than the property itself.
Just SOME Possible Property Exchanges
Vacant Land <–> Single Family House
Rental House <–> Rental Condo
Rental Condo <–> Retail Center
Duplex <–> Triplex
Apartment Building <–> Office Building
Office Building <–> Vacant Lot
With 1031 exchange, a real estate investor can exchange a vacant lot for a rental condo, a rental house for a shopping center, a rental condo for a vacant lot, a shopping center for an apartment building, and just about any other combination you can imagine. With a properly structured 1031 tax deferred exchange, an investor can actually complete the transaction without paying any capital gains tax at all.
Right now, you may be imagining that the process is way too complicated to be worth it. Or perhaps that the process must be terribly expensive if it will save you tens of thousands (in some cases hundreds of thousands) of dollars. However, it’s really not complicated at all and it’s less expensive than you can possibly imagine (typically less than $1,000 regardless of the cost of the property).
We can help you buy or sell real estate using the 1031 tax deferred exchange. The best part is that the process is simple and we will help you every step of the way.
Have investment property and want to sell it?
Want to buy investment property?
Contact us for more information. You will be amazed how simple it can really be.
1031 Exchange
Use your money to leverage your investments
instead of paying capital gains taxes
each time you buy or sell real estate.
See also TIC Investments
Disclaimer: Neither Branon Edwards nor Aqualand Real Estate are accountants or attorneys and thus are not qualified to provide financial or legal advice. 1031 exchange involves the use of a qualified intermediary in addition to your real estate professional. As with any tax strategy, investors should consult their accountant or attorney about their specific situation before moving forward.