Tax-Deferred Real Estate Exchanges

Tax-Deferred Real Estate Exchanges


Tax season is finally over! Now its time to think about how you can invest more. If you own an investment property and or thinking about selling an existing investment to purchase another one, you may want to consider a 1031 exchange. This exchange is tax free!

This helps investors defer paying capital gain and tax on property dispositions which means you may have some more money in your pocket to invest.   However, there are some requirements for this type of exchange.

The Rules


  1. Transaction Type. The transaction must be an exchange. You must involve a Qualified Intermediary and the investor must sign an exchange agreement.

  2. Property Type. The property you are ‘exchanging’ must be like kind. For example a house for a duplex or a triplex for a piece of land.

  3. Tax payer. The taxpayer must be the same person who is selling and purchasing the replacement property.

  4. Investment. The property that is purchased or sold must be an investment.

  5. Deferring Tax Amount. In order to defer the tax the purchased property must be equal to or greater than the existing property.

  6. Timing. The taxpayer has 45 days to replace the property that is being sold.


Always consult your tax advisor!


Resources can be found here

Disclosure: 1031 Exchange is tax free up until you sell the property and don't exchange it for another one.