Why Use a 1031 Exchange?
Powerful tax deferral strategy for real estate investors to build wealth faster.
Defer all capital gains taxes when done correctly
Reinvest full sale proceeds into replacement property
Continue exchanging indefinitely to build wealth
Common 1031 Exchange Scenarios
Upgrade Strategy
Sell smaller rental, buy larger multi-unit property
Example: $200K duplex → $500K 8-plex
Consolidation
Sell multiple small rentals, buy one larger property
Example: 3 houses → 1 apartment building
Location Change
Exit declining market, enter growth market
Example: Charlotte rental → Newton investment
Management Relief
Trade active management for passive investment
Example: Rentals → DST or triple-net lease
1031 Exchange Services
Expert guidance to ensure compliant and successful tax-deferred exchanges.
1031 Planning
Strategic planning before listing relinquished property, timeline management, and replacement property identification to ensure successful exchange and maximum tax deferral.
Qualified Intermediary
Connections to experienced 1031 intermediaries who handle funds, prepare documents, and ensure IRS compliance throughout the exchange process.
Replacement Property Search
Urgent property searches within 45-day identification period, comparable analysis, and access to off-market deals meeting investment criteria and timeline.
Investment Analysis
Cash flow comparison between relinquished and replacement properties, appreciation potential, and long-term wealth building analysis for smart exchanges.
Timeline Management
Strict adherence to 45-day identification and 180-day closing deadlines, backup property strategies, and contingency planning to avoid exchange failure.
Professional Coordination
Coordination with CPAs, attorneys, lenders, and qualified intermediaries to ensure seamless exchange process from start to finish.
1031 Exchange Process
Critical steps and strict timelines for successful tax-deferred exchanges.
Pre-Sale Planning (Before Listing)
Consult with CPA and qualified intermediary BEFORE listing property. Set up exchange agreement, identify replacement property criteria, and plan timeline. Cannot touch sale proceeds directly.
Sell Relinquished Property (Day 0)
Close on sale of current investment property. Proceeds held by qualified intermediary (NOT investor). Clock starts ticking on 45-day identification and 180-day closing deadlines from this date.
Identify Replacement Properties (45 Days)
Identify up to 3 properties of any value OR unlimited properties totaling 200% of relinquished property value. Submit written identification to intermediary by midnight of day 45. This deadline is STRICT - no extensions.
Purchase Replacement Property (180 Days)
Close on one or more identified replacement properties within 180 days of relinquished property sale (or by tax return due date, whichever is earlier). Equal or greater value to defer all taxes.
Complete Exchange & File Taxes
Exchange funds transferred from intermediary to closing. File Form 8824 with tax return reporting exchange details. All capital gains taxes deferred - continue building wealth tax-free.
1031 Exchange Rules
Must Follow Rules
- ✓Both properties must be held for investment or business use
- ✓Replacement property must be equal or greater value
- ✓Must use qualified intermediary to hold funds
- ✓Meet strict 45-day and 180-day deadlines
- ✓Cannot receive cash proceeds directly
Common Mistakes
- ✗Not setting up intermediary before selling relinquished property
- ✗Missing 45-day identification deadline (no extensions allowed)
- ✗Buying replacement property worth less than relinquished
- ✗Taking cash out ("boot") which triggers taxable gain
- ✗Exchanging into personal residence (must be investment)
1031 Exchange Example
Tax savings comparison: Traditional sale vs. 1031 exchange.
Traditional Sale
1031 Exchange
$55,500 More Capital to Invest
1031 exchange preserves 100% of equity for reinvestment, accelerating wealth building
Execute Your 1031 Exchange
Let Lisa J. Smith guide you through the complex 1031 exchange process in Catawba County. With over 10 years of local expertise and $35M+ in career sales, she understands the strict timelines and requirements to ensure your exchange succeeds and taxes remain deferred.