A properly structured 1031 exchange may allow you to defer — not eliminate — capital gains taxes at the time of sale. By reinvesting proceeds into qualifying like-kind replacement property, you may postpone the tax obligation to a future date. However, the deferred taxes remain attached to your basis in the replacement property and become due when that property is eventually sold outside of an exchange.

1031 exchanges involve strict rules and deadlines. Missing a deadline or failing to meet requirements may trigger the full tax immediately. This strategy is not suitable for everyone. Consult your CPA and legal counsel before proceeding.

When you own rental property, the IRS allows you to deduct a portion of the building's value each year as depreciation. When you sell, the IRS taxes those accumulated deductions — at rates up to 25% — regardless of your income level. For long-term landlords, depreciation recapture is often the largest unexpected cost in a sale.

In a properly structured 1031 exchange, depreciation recapture may be deferred along with capital gains, carrying forward into the replacement property's cost basis. If the replacement property is eventually sold without an exchange, the full deferred recapture becomes taxable at that time. Tax treatment depends on individual circumstances — consult your CPA.

A 1031 exchange does not require you to purchase another rental property you manage yourself. One option is to exchange into a Delaware Statutory Trust (DST) — a passive, professionally managed real estate investment that may qualify as like-kind replacement property.

However, DSTs are illiquid investments, typically with projected hold periods of 5–10 years or more. They involve real estate and sponsor risk, are generally available only to accredited investors, and can result in loss of principal. DSTs are not suitable for all investors. Whether this approach fits your situation depends on your income needs, timeline, and overall financial picture.

Potentially, depending on your gain and how long you've owned the property. Even a modest rental held for 15–20 years may carry a significant embedded gain and years of accumulated depreciation. Whether an exchange is worth pursuing depends on your total estimated tax exposure, your income needs in retirement, and what replacement property options are available and appropriate for your situation.

That's precisely the analysis we work through in an initial call — without obligation and without a predetermined recommendation.

Once you close on the sale of your relinquished property, the clock starts. You have 45 calendar days — with no extensions — to identify up to three potential replacement properties in writing to your qualified intermediary. You then have 180 calendar days from closing to complete the purchase of a replacement property.

These deadlines are firm. Missing either one may cause the entire deferred tax to become due immediately. This is why beginning the planning process well before you list your property is important — attempting to identify replacement property under time pressure significantly increases the risk of a poor outcome or a failed exchange.

Yes, but any cash received — referred to as "boot" — is taxable in the year of the exchange. To defer all taxes, you would generally need to reinvest all of the net proceeds and replace all existing debt. If you want partial deferral and partial liquidity, a partial exchange may be possible, but it requires careful structuring and will result in some tax being due.

We help model both scenarios so you can weigh how much liquidity you need against the tax cost of taking it. This is general guidance — your CPA should be involved in the final structure.

Under current tax law, when an investor passes away, heirs may receive a stepped-up cost basis in inherited assets equal to fair market value at the date of death. If this applies, it could potentially reduce or eliminate the deferred capital gains and depreciation recapture that accumulated during the investor's lifetime.

However, step-up rules are subject to change by Congress, and the actual benefit depends on the investor's estate, the structure of ownership, and applicable law at the time of death. This is not a guaranteed outcome. Estate planning attorneys and CPAs should be consulted to evaluate how this may apply to your individual situation.

It depends on what you want from the next chapter. A DST may be worth considering if your priority is eliminating active management and simplifying your holdings. A traditional replacement property may make more sense if you want ongoing control, the ability to leverage the asset, or greater flexibility over time.

Neither is universally better. DSTs are illiquid and involve real estate and sponsor risk — they are not suitable for all investors. Traditional replacement properties carry their own operational and market risks. The right answer depends on your income needs, risk tolerance, time horizon, and estate planning goals. We model both paths before making any recommendation.