Frequently Asked Questions

A 1031 exchange is a way to sell an investment or business property and buy another investment or business property, while deferring capital gains taxes by reinvesting the proceeds through a Qualified Intermediary instead of taking the cash.

Like-kind is broad for real estate. In a 1031 exchange, what qualifies is “real property” held for investment or used in a trade/business, exchanged for other real property that will also be held for investment or business use.

Examples that generally qualify: you can swap a rental house for an apartment building, raw land, retail, industrial, or an office property—as long as both sides are investment/business real estate.
 
Big “does NOT qualify” buckets: your primary residence/personal-use property, and property held primarily for sale (like flips/inventory). Also, after the TCJA change, Section 1031 applies to real property—not personal property like equipment.

If you miss the 45-day identification deadline, your 1031 exchange generally fails. That means the sale of your relinquished property is treated as a taxable sale, and you’ll recognize the gain (and any applicable taxes) instead of deferring it. The IRS is very clear that you must meet the 45-day and 180-day time limits for the exchange to work, and they generally can’t be extended for hardship.  
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The main “exception” is disaster relief. If you’re an “affected taxpayer” in an IRS-designated federally (presidentially) declared disaster area, the IRS can postpone these deadlines under its disaster-relief procedures.

For a standard delayed (Starker) 1031 exchange, yes—you generally need a Qualified Intermediary (QI), or you must use another IRS-approved “safe harbor” method (like a qualified escrow or qualified trust) so you do not actually or constructively receive the sale proceeds. If you touch or control the money, the IRS will usually treat the transaction as a taxable sale instead of an exchange.  

Yes. You can do a partial 1031 exchange. The exchange doesn’t “break” just because you don’t roll everything over. You simply pay tax on the portion you don’t reinvest (called “boot”), and you still defer tax on the portion that stays inside the exchange.  
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The two most common ways people create a partial exchange are (1) taking cash out at the end (cash boot) and/or (2) reducing debt from the old property to the new one without replacing it with new debt or additional cash (mortgage boot).

“Boot” is anything you receive in a 1031 exchange that isn’t like-kind real estate—most commonly cash or debt relief—and it’s taxable up to the amount of gain you realized on the sale.  
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Two common types:Cash boot: you (directly or indirectly) receive cash from the exchange.  Mortgage boot: your debt goes down from the old property to the new one (unless you replace that difference with new debt or extra cash).  
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Quick example: you sell a property with a $500k loan and buy the replacement with a $400k loan—often that $100k difference is taxable mortgage boot unless you make it up with added cash or debt.

Yes—you can exchange into multiple replacement properties. The IRS rules allow you to buy one or more of the properties you properly identify within the identification period.  
Here’s the practical constraint: you must follow one of the identification “count/value” rules when you list your replacement options:

1. Three-Property Rule: Identify up to 3 properties (any value) and buy any 1, 2, or all 3.  

2. 200% Rule: Identify any number of properties as long as their total value is not more than 200% of what you sold.  

3. 95% Rule (rare): If you go over both limits, you must buy at least 95% of the total value of everything you identified.

Contact a Qualified Intermediary before your sale closes—ideally as soon as you decide “I might do a 1031,” and absolutely before you sign final closing instructions or wire directions.
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Why: in the common delayed exchange, you must avoid actual/constructive receipt of the sale proceeds, and the exchange is set up through a written exchange agreement and assignments that need to be in place before closing. If you wait until after closing and the money has hit your control (even briefly), it’s usually too late to fix.  
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Simple rule for your landing page: “Call us before you close—earlier is safer.”