Like-kind replacement
Any U.S. investment real estate can replace any other — a rental house, raw land, or a DST interest all qualify.
Education
The 1031 exchange.
Under IRC §1031, an investor who sells investment real estate and reinvests the proceeds in like-kind property can defer capital gains tax — keeping the full equity working instead of surrendering a third of it. The mechanics are strict; the payoff is compounding.
The framework
Three rules govern every exchange.
Equal or greater value
To fully defer, replace both the equity AND the debt from the property you sold.
Hands off the proceeds
Funds must sit with a qualified intermediary between closings — touch the money and the exchange dies.
The exchange clock
From Day 0 to Day 180.
Day0
Sale closes
Proceeds transfer to your qualified intermediary. The clock starts.
Day45
Identification deadline
Replacement property must be identified in writing — under the 3-property, 200%, or 95% rule.
Day180
Acquisition deadline
Replacement property must close. DSTs can typically accept funds in as little as 2–3 business days — which is how failing exchanges get saved.
Day 45, three ways
Identification is a choice of rule.
You identify replacement property under one of three rules — whichever fits the exchange. Choose one:
Option A
3-property rule
Identify up to three properties of any value.
Option B
200% rule
Identify any number of properties, up to 200% of the value you sold.
Option C
95% rule
Identify more than 200% — but then you must close on 95% of what you named.
The honest part
Where exchanges get hard.
Five pressures to plan for before the clock starts:
- Finding quality replacement property inside 45 days
- Matching or exceeding your debt without over-leveraging
- Closing risk — a single fall-through can fail the whole exchange
- Management burden of the replacement you buy
- Concentration: rolling one property into one property
Choosing the structure
One property sold, three ways to own the next.
Sole ownership
Full control — and full management burden, closing risk, and concentration.
Tenants-in-common (TIC)
Fractional ownership with up to 35 co-owners; unanimous votes make decisions slow.
The modern default
Delaware Statutory Trust (DST)
Fractional, fully passive institutional ownership — the structure that solved the TIC era's problems.
Understand DSTsDeferral is not avoidance — it's leverage. Equity that would have gone to tax keeps earning through every exchange, and heirs may receive a step-up in basis that eliminates the deferred gain entirely.
Next step
Complimentary Investor Evaluation
Bring us the property, the timeline, and the goal. You'll leave the first conversation knowing every option on the table — and what we'd do in your position.