Exchange Type
1031 Deferred / Delayed Exchange
The most common type of 1031 exchange. Sell your relinquished property first, then identify and acquire your replacement property within the 45 and 180-day statutory windows.
What is a 1031 Deferred / Delayed Exchange?
A 1031 Deferred Exchange — often referred to as a Delayed Exchange or like-kind exchange — allows real estate investors to defer capital gains taxes on the sale of a property, provided the proceeds are reinvested in another similar property within a specific time frame. Unlike a simultaneous exchange, a deferred exchange gives investors additional time to identify and acquire a suitable replacement property.
Key Rules & Deadlines
- 45 days to identify potential replacement properties after selling the relinquished property
- 180 days to close on the replacement property from the date of the original sale
- Missing either deadline disqualifies the exchange and makes the entire transaction taxable
Step-by-Step Process
Engage a Qualified Intermediary
Select a reputable QI before you sign the sale contract. The QI will hold all exchange proceeds and guide compliance throughout.
Sell the Relinquished Property
Proceeds from the sale transfer directly to the QI — you cannot receive or control the funds at any point.
Identify Replacement Property (Day 1–45)
Submit a written identification to your QI within 45 days using the 3-Property Rule, 200% Rule, or 95% Rule.
Purchase Replacement Property (Day 1–180)
The QI uses held funds to close on one or more identified replacement properties within 180 days of your sale.
File IRS Form 8824
Report the exchange at tax time using Form 8824, confirming both properties and the tax deferral structure.
Benefits
Capital Gains Tax Deferral
Reinvest the full sale proceeds without paying taxes upfront — allowing for compounded portfolio growth.
Portfolio Flexibility
Diversify or consolidate holdings — sell one property and acquire multiple smaller ones, or vice versa.
Estate Planning Benefits
Heirs may benefit from a step-up in basis, potentially erasing the deferred tax obligation entirely.
Increased Cash Flow
Reinvest into higher-income properties to grow cash flow and appreciation potential strategically.
Watch Out For: Taxable Boot
If the replacement property costs less than the relinquished property, or if any cash or debt relief is received, a taxable "boot" can result. Partial exchanges can complicate the transaction and may lead to unintended tax consequences. Our legal team structures every exchange to minimize boot exposure from day one.
Explore Your 1031 Exchange Opportunities with Our Expertise
Schedule a Consultation Today