1031.Exchange INTELLIGENCE NETWORK
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FEDERAL FRAMEWORK

1031 Exchange Rules

The core eligibility, property, timing and reporting concepts investors should understand before structuring an exchange.

Start with four questions.

  1. Is the relinquished property qualifying real property held for investment or productive business use?
  2. Is the intended replacement property qualifying like-kind real property?
  3. Will the exchange be structured to comply with applicable receipt and timing rules?
  4. How will money, debt, ownership and any non-like-kind consideration affect recognized gain and basis?

Real property held primarily for sale does not qualify. U.S. real property and foreign real property are not like kind to each other. A delayed exchange generally requires written identification within 45 days and receipt within 180 days or the applicable tax-return due date, including extensions, if earlier.

These are framework-level rules. Entity changes, partnership interests, related parties, personal use, construction, reverse transactions and mixed consideration can introduce additional issues that should be reviewed professionally.

Primary / reference sources

RELATED INTELLIGENCE

Continue the research.

DEADLINES

180-Day Exchange Period

Understand the second major timing marker in a deferred exchange and the important tax-return due-date limitation.

Open guide →DEADLINES

45-Day Identification Rule

What the federal 45-day replacement-property identification window means and why replacement research should begin before closing.

Open guide →TAX CONCEPTS

Basis & Depreciation After an Exchange

Why deferred gain changes the basis story and why replacement-property economics should be modeled after the exchange.

Open guide →TAX CONCEPTS

Boot in a 1031 Exchange

A plain-English introduction to money or non-like-kind property received in an exchange and why it can affect recognized gain.

Open guide →
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