top of page
Real Estate

1031 Exchanges

Since their introduction in 1921, 1031 Exchanges have remained a key component of tax legislation. These provisions enable property investors to postpone capital gains taxation by exchanging their appreciated real estate for similar properties rather than conducting cash sales with tax obligations.

 

Most real estate qualifies as like-kind property if it's maintained for investment or business purposes.​

Like-Kind Exchanges

Despite what the name suggests, "like-kind" doesn't mean you need to swap your downtown apartment for another downtown apartment.

​

In the world of 1031 exchanges, "like-kind" refers to the nature or character of the property, not its quality or grade. It's like comparing apples to oranges – they're different fruits, but they're both fruit!

 

Similarly, as long as both properties are held for business or investment purposes, they're generally considered "like-kind."

Types of Like-Kind Exchanges

The flexibility in types of like-kind exchanges opens up a world of possibilities. You could potentially exchange:

  • A small apartment building for a large office complex

  • Land for a retail store

  • A warehouse for a multi-family residential property

​

The key is that both properties must be used for business or investment purposes.

 

Your personal residence doesn't count here!

Simplifying Your 1031 Exchange Journey: A 4-Step Guide

Modern Townhouses
Image by Ian Keefe

​Are you ready to unlock the power of 1031 Exchanges? Whether you're a first-time investor or a seasoned real estate pro, we've got you covered.

 

Let's break down this powerful tax-deferral strategy into four easy-to-follow steps.

01

Partner with a Qualified Intermediary (QI)

Timeline: Before selling your property
 

Think of your QI as your 1031 Exchange co-pilot. They'll navigate the complex regulations while you focus on your investment strategy.
 

  • We can connect you with a trusted QI if needed

  • Your QI will set up a special 1031 Exchange account

  • This must be done before you close on your property sale

03

Identify Your Next Investment

Timeline: Within 45 days of selling your property


Now comes the exciting part – choosing your next investment opportunity!
 

  • You have 45 days to identify potential replacement properties

  • Your QI will provide a form to submit your choices in writing

  • A Delaware Statutory Trust (DST) might be an appropriate replacement as a fallback or for investors seeking a passive investment. It can be one of your identified properties!

02

Sell Your Current Property

Timeline: Day 0 of your 180-day exchange period


It's time to bid farewell to your current property (also known as the "relinquished property").

​
 

  • Your QI works with the escrow company to handle all necessary paperwork

  • All sale proceeds go directly to your QI – it's a crucial rule of the 1031 Exchange process

04

Close On Your New Property

Timeline: Within 180 days of selling your original property


The final stretch! It's time to acquire your replacement property.
 

  • Your QI coordinates with the new property's escrow company

  • They'll handle all necessary exchange documentation

  • Funds are transferred for closing

For more information on 1031 Exchanges, see the IRS fact sheet.

Securities offered only by duly-licensed individuals through Madison Avenue Securities, LLC (MAS), member FINRA/SIPC. Investment advisory services offered through Csenge Advisory Group, LLC, a registered investment advisor. Wayfinder Wealth, Csenge Advisory Group, LLC, and MAS are not affiliated entities and do not provide legal or tax advice. Investing involves risk, including the potential loss of principal. Our firm is not permitted to offer and no statement made during this presentation shall constitute tax or legal advice. General 1031/TIC risks include potential for property value loss, change of tax status, potential for foreclosure, Illiquidity, impact of fees and expenses, reduction or elimination of monthly cash flow distributions, and loss of management control. IRC restrictions include - Properties must be held for productive use in a trade, a business, or as an investment The investor must identify the replacement property within 45 days from closing on the sale of a relinquished property and the new property must be acquired within 180 days of the original sale Properties must be exchanged solely for a “like-kind” property
The seller must not directly receive funds from the sale of the relinquished property. Our firm is not licensed to buy or sell real estate properties.

© 2025 by 1031 Way

bottom of page