A 1031 Exchange is a tax-deferral strategy that allows real estate investors to sell an investment property and reinvest the proceeds into another qualifying property without immediately paying capital gains taxes. The goal is to keep more capital working for you by rolling gains forward instead of cashing out. This strategy is commonly used to scale portfolios or reposition assets.

Learn more in our 1031 Exchange Basics Guide

A 1031 Exchange follows two strict timelines set by the IRS. You have 45 days from the sale of your property to identify potential replacement properties, and 180 days total to close on one of them. These deadlines run concurrently and cannot be extended in most cases.

Yes, you can complete a 1031 Exchange using properties located in different states. The IRS only requires that both the sold and purchased properties are qualifying investment or business real estate within the United States. Many investors use 1031 Exchanges to diversify or move into more favorable markets.

If you miss the 45-day identification deadline, your 1031 Exchange will fail. When that happens, the sale is treated as a taxable event, and capital gains taxes may be due. Because the deadline is strict, planning ahead is critical.

Yes, a Qualified Intermediary (QI) is required to complete a valid 1031 Exchange. The QI holds the sale proceeds and ensures the exchange follows IRS rules, including proper documentation and timelines. Investors cannot touch or control the funds during the process.