1031 answers
Straight answers to the questions people actually ask.
No jargon, no fluff — just clear answers about deadlines, costs, boot, and what a 1031 exchange can and can’t do.
General education — not tax or legal advice. This explains how §1031 exchanges work in general terms and uses simplified assumptions. Rules and tax rates change and your situation is specific. Talk to a qualified CPA or tax attorney before you rely on any of it. See our full terms & legal notice.
- Do I need a Qualified Intermediary for a 1031 exchange?Yes. For virtually every 1031 exchange you must use a Qualified Intermediary (QI). By law you cannot take receipt of you…
- Can I access my money during a 1031 exchange?No. During the exchange your sale proceeds are held by your Qualified Intermediary and you cannot access or control them…
- What happens if I miss the 45-day identification deadline?If you don’t identify your replacement property in writing by day 45, your exchange fails and the entire gain from your …
- Is a 1031 exchange 180 days total, or 45 plus 180?It’s 180 days total, not 45 plus 180. Both clocks start on the same day — the day your relinquished property closes. You…
- How many properties can I identify in a 1031 exchange?You can identify more than one. The usual choice is the 3-property rule: you may name up to three replacement properties…
- Can I buy multiple replacement properties in one 1031 exchange?Yes. You can use the proceeds from one sale to acquire several replacement properties in a single exchange, as long as y…
- What is boot, and how is it taxed in a 1031 exchange?Boot is any value you receive in a 1031 exchange that isn’t like-kind real estate — most commonly leftover cash ("cash b…
- Do I have to reinvest all the proceeds in a 1031 exchange?To defer 100% of your tax, yes — you generally need to reinvest all of your net sale proceeds and acquire property of eq…
- What taxes does a 1031 exchange defer?A 1031 exchange defers the federal capital gains tax on your profit, the depreciation recapture tax on the depreciation …
- How much does a 1031 exchange cost?A standard deferred 1031 exchange typically costs a Qualified Intermediary fee in the range of roughly $800 to $1,500 fo…
- Can I 1031 exchange into a primary residence?Not directly. A 1031 exchange requires both properties to be held for investment or business use, and a primary residenc…
- Can I do a 1031 exchange on a vacation home?Sometimes. A vacation home qualifies for a 1031 exchange only if it’s genuinely held for investment rather than personal…
- What property qualifies as like-kind in a 1031 exchange?For real estate, "like-kind" is very broad: almost any real property held for investment or business use can be exchange…
- Can I 1031 exchange a property for one in another state?Yes. U.S. real estate is like-kind to other U.S. real estate regardless of state, so you can sell in one state and buy y…
- What is a reverse 1031 exchange?A reverse 1031 exchange is one where you buy the replacement property before you sell the property you’re giving up — th…
- Can I 1031 exchange into a DST (Delaware Statutory Trust)?Yes. A fractional interest in a properly structured Delaware Statutory Trust (DST) is treated as direct ownership of rea…
- How long do I have to hold the replacement property after a 1031 exchange?There’s no fixed holding period written into the tax code, but you must genuinely intend to hold the replacement propert…
- What is a Qualified Intermediary, and why must they be neutral?A Qualified Intermediary (QI) is the independent company that holds your sale proceeds during a 1031 exchange and uses t…
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