1031 Exchanges

A Section 1031 like-kind exchange allows real estate investors to defer federal — and often state — capital gains tax when selling an investment property, provided the proceeds are reinvested into another qualifying investment property under strict IRS rules and timelines.

Why a 1031 Exchange?

Done correctly, a 1031 exchange lets you sell appreciated real estate, roll 100% of the proceeds into a new property, and defer the capital gains tax and depreciation recapture that would otherwise be due. That deferred tax stays invested — compounding in the next property instead of going to the IRS.

The Rules That Matter Most

• 45-day identification window — you must identify replacement property within 45 days of the sale
• 180-day closing window — the replacement property must close within 180 days of the original sale
• Like-kind requirement — both properties must be held for investment or productive use in a trade or business
• Qualified Intermediary required — you cannot take constructive receipt of the sale proceeds
• Equal or greater value — to fully defer tax, replacement debt and equity must match or exceed the relinquished property
• Same taxpayer rule — the entity that sold must be the entity that buys

Where Most Exchanges Go Wrong

The two most common problems we see are missed deadlines and "boot" — cash or debt relief received in the exchange that becomes immediately taxable. Both are avoidable with planning that starts before the relinquished property goes under contract, not after.

How FSG Helps

We don't act as your Qualified Intermediary — that role belongs to an independent QI. What we do is coordinate the tax strategy around the exchange: modeling the deferred gain, projecting the depreciation schedule on the replacement property, evaluating whether a 1031 is even the right move versus paying the tax, and integrating the outcome into your broader income and estate plan.