1031 Exchange Basics: A Plain-English Guide for Investors.
The mechanics every accredited investor should know before selling appreciated investment real estate. Five guides covering the rules, the timeline, and the situations that fall outside the standard playbook.
A 1031 exchange lets you defer federal capital gains tax when you sell investment real estate and reinvest the proceeds in like-kind replacement property. The IRS gives you 45 days to identify a replacement and 180 days to close. The mechanics matter, the deadlines do not move, and the most common mistakes are also the most preventable.
The five guides below cover the core mechanics, the four-step process, and the three situations that need their own playbook: reverse exchanges (buy first, sell second), failed exchanges (when something goes wrong), and inherited property (when the step-up in basis changes the math). Read in order if you are new to 1031. Jump to what you need if you are in a specific situation.
1031 Exchange Guide.
The 45-day rule, the 180-day rule, the three identification rules (three-property, 200%, 95%), and the most common mistakes investors make. The foundation everyone in a 1031 should know cold before they close on a sale.
Read the guideThe 1031 Process.
From property sale to subscription closing, the full timeline in plain English. What you will experience as an investor at each of the four steps, what you need ready, and what your QI handles for you.
See the processReverse 1031 Exchanges.
What happens when you find the replacement property before you sell. Reverse exchanges let you buy first and sell second, under strict 180-day rules and a separate IRS playbook (Revenue Procedure 2000-37). More expensive, more constrained, sometimes essential.
See how it worksFailed 1031 Recovery.
Your exchange just blew up. Now what? Tax exposure, partial deferral options, and the structural moves that can salvage some, but rarely all, of the deferred gain. The clock matters; the right move depends on where in the process the failure happened.
Get the recovery optionsInherited Property and Step-Up Basis.
Heirs of rental property face a different set of tax rules than the original owner. When a 1031 still makes sense, when the step-up in basis at death makes it unnecessary, and how to decide between the two. The strategy known as “swap till you drop” lives here.
Read the heir’s guideNext: choose your replacement property.
Once you understand the mechanics, you need to choose what to exchange into. For most accredited investors selling appreciated real estate, that means evaluating Delaware Statutory Trusts (DSTs). Start with DSTs Explained for the structure and trade-offs, then use the Sponsor Evaluation Framework to run any sponsor (including us) through the three tests every investor should apply.
If you have a sale closing date already, the fastest move is the 1031 Deadline Calculator. Enter your closing date and see your Day 45 and Day 180 immediately.
Have a 1031 question? Talk to a specialist.
A 20-minute conversation with a registered representative who understands 1031 timing, DST options, and how to map your situation to the right replacement strategy. No pitch deck, no obligation.