Can I do a 1031 exchange on my primary residence?

No. 1031 exchanges only apply to investment or business property. Your primary home qualifies for a separate exclusion - up to $250K single / $500K married in capital gains tax-free under Section 121.

What does "like-kind" mean?

For real estate, "like-kind" is very broad. You can exchange an apartment building for vacant land, a commercial building for a rental house, or farmland for an office building. It just has to be real property held for investment or business use.

What are the key deadlines?

Two critical deadlines: (1) Identify up to 3 replacement properties within 45 days of selling. (2) Close on the replacement property within 180 days. Miss either deadline and the entire exchange fails.

Can I use the sale proceeds before buying the replacement?

No. The proceeds must go directly to a Qualified Intermediary (QI) - you can never touch or control the money. If the funds hit your account, the exchange is disqualified.

Can I chain multiple 1031 exchanges?

Yes, and this is incredibly powerful. You can chain 1031s for decades, continuously upgrading properties without ever paying capital gains. When you pass away, your heirs get a stepped-up basis - potentially eliminating all deferred gains permanently.

Real Estate

1031 Exchange

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advanced · $250K - $500K

Sell rental property with huge gains, pay zero capital gains tax if you buy "like-kind" replacement property within 180 days.

Can chain 1031s for decades, then heirs get step-up in basis at death (zero tax ever paid).

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Key takeaways

Selling investment property and buying like-kind replacement property within the deadlines defers all capital gains tax.
Key deadlines: identify replacements within 45 days, close within 180 days; miss either and the exchange fails.
Proceeds must go through a qualified intermediary; touching the money disqualifies the exchange.
Chaining exchanges over time defers gains, and heirs may receive a stepped-up basis.

Requirements

Investment or business property (not primary residence)
Identify replacement property within 45 days
Close on replacement within 180 days
Must use qualified intermediary

How to Implement

1Engage qualified intermediary BEFORE selling
2Sell property (proceeds go to intermediary, not you)
3Identify up to 3 replacement properties within 45 days
4Close on replacement property within 180 days
5Equal or greater value and debt required

The bottom line
A 1031 exchange defers capital gains on investment real estate by rolling into like-kind property. Its success depends entirely on the 45- and 180-day deadlines and using a qualified intermediary.

Frequently Asked Questions

Featured Providers

IPX1031
Asset Preservation
First American Exchange

Educational Only: This information is for educational purposes. Consult a qualified financial advisor or tax professional before implementing.

Last reviewed: April 2026

Related real estate strategies

Rental Property DepreciationDeduct "paper loss" of 3.6% of building value each year - even if property appreciates.Cost Segregation StudyAccelerate depreciation on commercial property - deduct 20-40% in year one.Real Estate Professional StatusQualify as RE professional to deduct rental losses against W-2 income.

Sources

Internal Revenue Service, Rev. Proc. 2025-32
2026 inflation-adjusted amounts (tax brackets, standard deduction, estate & gift, FSA, credits)
Internal Revenue Service, Notice 2025-67
2026 retirement plan limits (401(k), IRA, SIMPLE, catch-up)
Internal Revenue Service, Rev. Proc. 2025-19
2026 HSA and HDHP inflation-adjusted limits

Educational information only. Not financial, tax, or legal advice or a recommendation. Figures are drawn from the primary sources cited above; verify current amounts with the source before acting.