Most 1031 exchange mistakes happen because investors focus heavily on the tax savings and underestimate the rules that protect those savings in the first place. At Above & Below 1031, we regularly speak with investors who: start searching for replacement properties too late assume deadlines are flexible misunderstand like-kind rules accidentally trigger taxable gain during the process In some cases, a single mistake can turn a tax-deferred exchange into a fully taxable sale.

You bought a rental property a few years ago. It’s gone up in value, the rent has been steady, and now you’re thinking about selling. Then you run the numbers and realize how much of your profit could go to capital gains taxes. This is where many investors start looking into a rental property 1031 exchange. A 1031 exchange allows you to defer those taxes by reinvesting the proceeds into another investment property instead of cashing out. When done correctly, it helps you keep

You’ve found a better investment opportunity, just not in the same state. Maybe you’re selling a property in California and looking to reinvest in Texas. Or you’re moving equity from a high-tax Northeast market into a growing rental market like DFW. Either way, the question comes up quickly: Can you complete a 1031 exchange in different states? At the federal level, the answer is straightforward. But what most investors don’t realize is that the real complexity begins at the

You are under contract on your investment property. Your Qualified Intermediary is in place. And now comes the question that trips up more investors than any other part of the identification process: how many replacement properties can you actually identify, and what rules govern that number? The answer is not as simple as "three." The IRS gives investors three distinct frameworks for identifying replacement properties in a 1031 exchange, and the 3 property rule is just the m

It is Day 46. Your relinquished property closed six weeks ago, your proceeds are sitting with your Qualified Intermediary, and you never submitted a written identification. If you miss 45 day identification 1031 exchange, here is what you need to know: the window is closed, the IRS will not reopen it, and the financial consequences are immediate. This is not a paperwork technicality. Missing the 45-day identification deadline in a 1031 exchange is a hard, statutory stop that

You just closed on your investment property. The proceeds are sitting with your Qualified Intermediary. And now the most stressful part of the entire 1031 exchange process begins; a 45-day window that the IRS will not budge on, not even by a single day. The 45-day rule in a 1031 exchange is the first of two non-negotiable deadlines that determine whether your tax deferral succeeds or falls apart entirely. From the date you transfer your relinquished property, you have exactly

A 1031 exchange (Section 1031 like-kind exchange) allows real estate investors to defer capital gains taxes when selling an investment property by reinvesting the proceeds into another qualifying property. Instead of paying taxes immediately, you can keep more of your equity working for you. When real estate investors sell a property, the focus is usually on one number: the sale price. But what often gets overlooked is what happens after the sale; when capital gains taxes, de

To start a 1031 exchange, you must retain a Qualified Intermediary (QI) before closing on your sale. You have 45 days from the sale date to identify replacement property and 180 days to close. A successful exchange allows you to defer 100% of federal capital gains tax and depreciation recapture, provided you buy at equal or greater value, reinvest all sales proceeds and replace your debt. In the world of real estate investing, the 1031 exchange remains one of the most potent

Real estate investors use the 1031 exchange to defer capital gains taxes by swapping one investment property for another. However, the IRS enforces a strict, non-negotiable timeline to qualify for this benefit. To successfully defer your taxes in 2026, you must identify a replacement property within 45 days and complete the purchase within 180 days of your initial sale. 1031 Exchanges Timeline Summary: A 1031 exchange timeline begins the day you close the sale of your "re

For real estate investors, the 1031 exchange is often called the "holy grail" of wealth building. By utilizing Section 1031 of the IRS Code, you can sell an investment property and reinvest the proceeds into a new property while potentially deferring 100% of your capital gains taxes. In simple terms, a 1031 exchange allows you to keep your entire equity working for you, rather than losing 15% to 23% of your profit to the government upon every sale. However, the IRS maintains

A 1031 exchange is a tax-deferral strategy that lets you sell investment or business real estate and reinvest the proceeds into other “like‑kind” real property without immediately paying capital gains or depreciation recapture tax. When structured correctly, it can preserve equity, increase cash flow, and help you scale or reposition your portfolio over time.​ What a 1031 Exchange Is A 1031 exchange (also called a like‑kind exchange) comes from Section 1031 of the Internal Re

In the context of 1031 exchanges, related parties refer to individuals or entities that have a certain relationship with the taxpayer...

Having an exchange agreement in place with a Qualified Intermediary (QI) is required to complete a 1031 exchange and comply with IRS regulations.

For example, an apartment building can be exchanged for raw land, a commercial property for a residential property, etc.