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DOES MY PROPERTY QUALIFY FOR A 1031 EXCHANGE?

Any property held for productive use in a trade, business, or for investment can be exchanged for like-kind property. “Like-kind” refers to the nature of the investment, not the form. This means that various types of investment properties can be exchanged—e.g., a single-family residence for a duplex, raw land for a shopping center, or an office for apartments. The flexibility of a 1031 Exchange allows you to adjust your investment strategy to suit your needs.

To confirm if your property qualifies, contact one of our qualified intermediaries.

HOW DO I GET STARTED IN A 1031 EXCHANGE?

Getting started is simple—just contact your 1031 Expert. Before reaching out, gather information about the parties involved in the transaction. If you are just beginning, that’s the perfect time to call. During your consultation, our exchange coordinator will ask about the property being sold and any potential replacement properties you're considering.

CAN I DECREASE MY PROPERTY VALUE AND PAY DOWN DEBT?

A 1031 Exchange allows flexibility. You can reduce the value of your new investment or reduce debt on the property. However, any money taken out, or “boot,” will be subject to capital gains tax.

CAN I EXCHANGE A VACATION HOME?

Yes, if the property meets the criteria outlined in Revenue Procedure 2008-16, effective March 10, 2008. This clarifies previous ambiguities around vacation homes and 1031 exchanges.

Contact your 1031 Expert to verify if your vacation home qualifies for an exchange.

CAN I EXCHANGE OUT OF ONE PROPERTY AND INTO MULTIPLE PROPERTIES?

Yes, you can exchange one property for several, or several properties for one, as long as the new properties meet the value, equity, and mortgage requirements. The key challenge is adhering to the time and identification constraints under Section 1031.

CAN I MAKE AN OFFER ON A PROPERTY BEFORE MY RELINQUISHED PROPERTY IS SOLD?

Yes, you can make an offer on a new property before your relinquished property is sold, provided the closing on the new property happens after the sale of your current property. This can be done as part of a delayed exchange.

Alternatively, if you must close on the replacement property before selling your current property, you can use a Reverse Exchange, though it is typically more costly.

CAN I EXCHANGE PROPERTY ACROSS STATE LINES?

Yes, 1031 Exchanges across state lines are common. However, tax treatment can vary by state, so it's important to consider each state's tax policy before proceeding.

DO I NEED TO RE-INVEST THE FULL SALES PRICE OR JUST THE NET PROCEEDS?

To qualify for full tax deferral, you must reinvest in a property of equal or greater value than the sales price of the property you're relinquishing. If the replacement property is of lesser value, or if you pull out some equity, you will be subject to taxes on the difference.

For a thorough explanation of how costs and proceeds affect your exchange, contact 1031 Experts.