What is 1031 Exchange?
A 1031 Exchange allows you to defer all capital gains taxes when selling an investment property by reinvesting the proceeds into a like-kind replacement property within strict timelines. This lets you trade up to larger properties without paying taxes on the gains.
Formula
Tax Deferred = Capital Gains Tax Rate × (Sale Price - Adjusted Basis)
Good
Successfully identifying replacement property within 45 days
Great
Trading into a property with better cash flow AND deferring all taxes
Watch For
Missing the 45-day identification or 180-day closing deadline kills the exchange
Frequently Asked Questions
What is a good 1031 Exchange for rental property?
A good 1031 Exchange is Successfully identifying replacement property within 45 days. A great 1031 Exchange is Trading into a property with better cash flow AND deferring all taxes. Be cautious if Missing the 45-day identification or 180-day closing deadline kills the exchange.
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