Why agents care
Investor sellers often plan sales around exchanges, so agents who understand the timeline and the need for an intermediary before closing are valuable on both sides of the deal.
Glossary term
1031 exchange
A 1031 exchange, named for Internal Revenue Code Section 1031, lets an investor defer gain on the sale of business or investment real property by reinvesting in like-kind property, following strict rules: a qualified intermediary holds the funds, replacement property is identified within 45 days and acquired within 180 days. Cash taken out (boot) is generally taxable.
Example
Example: an investor sells a rental for $600,000 with a $250,000 gain, reinvests all proceeds through an intermediary, and defers the gain. Taking $40,000 out would make that amount taxable.
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Questions by topic
1031 exchange: common questions
Can a primary residence be exchanged under 1031?
No. Section 1031 applies to business or investment property.
Is this tax advice?
No. Investors should work with a tax adviser and a qualified intermediary.
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