The term 1031 is defined under section 1031 of the IRS code. Also called a “like-kindexchange”, it is a swap of one investment asset for another. The process, when done correctly, allows one to defer capital gains tax. This exchange must be for investment and/or business property.
An investor sells the exchange asset first and then finds a replacement within 180 days.
An investor purchases a replacement property first and sells the exchange asset within the specific timeline.
30-90 Days
90 Days
45 Days
135 Days
90 Days closing extension
The IRS states that the property must be “Like-Kind” which is a very broad term. Given this, you can exchange almost any type of investment properties. For example, you could sell an apartment building and purchase a retail center or you could sell an acre of land and purchase a single tenant net leased property.
The exchanger can identify any three properties regardless of value.
The exchanger can identify four or more properties as long as the value does not exceed 200% of the property sold.
If the value exceeds 200%, then the Exchanger must purchase 95% of what is identified.
Use our mortgage calculator as a learning tool, but keep in mind that real rates and monthly payments can vary based on market conditions and factors like location and loan details. The estimates provided are based on your input and might not cover additional fees, such as taxes and insurance, which could increase your actual payment. Note that Ballou Real Estate Group does not provide loans, and this tool does not constitute a lending offer.
