Section 1031 lets investors roll a real estate sale into a new property of equal or greater value and defer federal capital gains tax. The headline benefits are famous; the landmines are not. The 45-day ID window is a hard clock — no extensions, no excuses. Boot (any non-like-kind value received) is taxable. Related-party rules can disqualify otherwise-clean exchanges. A reverse exchange gives you flexibility if you find the replacement first, but costs more and requires a parking arrangement. Done right, 1031s can chain across decades. Done wrong, you write a check to Treasury for 20-37% of your gain.
Strategy
1031 Exchanges in 2026: Rules, Timelines, and the Common Traps
Defer all the gain, or blow it on a technicality. Forty-five days to identify, 180 to close, and a qualified intermediary who actually knows what they're doing. The full mechanics, the boot rule, and the deals investors keep botching.