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How Long Does a 1031 Exchange Need To Be Rented?

Aerial view top down drone of the industrial zone in Gaborone in Commerce Park

A 1031 exchange allows you to enjoy tax-deferral benefits as you reinvest proceeds from a property sale into another like-kind asset. However, the IRS does require you to hold the acquired property for business or investment use. This rule can impede people who may want to convert their assets later, such as turning a rental property into their primary residence. In this blog post, Realized 1031 discusses how long a 1031 exchange needs to be rented to maintain your tax-deferred status and avoid IRS scrutiny.

May 11, 2025

Can You Pull Equity Out of a 1031 Exchange?

Business Building in Canary Wharf (London)

Undergoing a 1031 Exchange is a strategy for investors who want to defer their capital gains taxes. However, there are those who may consider pulling out equity from the 1031 Exchange funds for various reasons. As such, it’s common enough to question whether or not you can take out equity from this transaction. The answer is nuanced, but this practice is indeed possible. This article examines the regulations governing this action and provides guidance on how to remain compliant. Keep reading to learn more.

May 10, 2025

What is the 75% Guideline in a 1031 Exchange?

Check mark with wooden house

Executing a successful 1031 Exchange requires investors to be well-informed about several complex IRS rules to preserve the exchange’s tax-deferred benefits. One important rule is the “substantially the same” requirement. IRS regulations require that the replacement property ultimately acquired must closely match the property identified during the 45-day identification period in terms of nature, character, and sometimes location. While there is no formal IRS rule requiring acquisition of a specific percentage of a property’s value, some industry participants use an informal 75% guideline — suggesting that acquiring at least 75% of an identified property’s value may help demonstrate substantial compliance. This guideline may be a helpful reference point when structuring your exchange, but full compliance depends on the specific facts and circumstances of each transaction.

May 8, 2025

Can a 1031 Exchange Be Used for Rental Property?

Cityscape of a residential area with modern apartment buildings, new sustainable urban landscape in the city

A 1031 Exchange is a popular investment strategy that allows you to swap like-kind properties to defer taxes on capital gains. The IRS has strict rules regarding which types of properties are allowed, so it’s natural for investors like you to wonder whether or not the assets you own are applicable. Rental properties, in particular, are a common inquiry because of their ubiquity in investment portfolios.

May 7, 2025

How Crowdfunding for a 1031 Exchange Works

Car Salon at night.

Choosing a replacement property in a 1031 exchange plays an important role in shaping the direction of your investment going forward. For the majority of investors, the most straightforward method is exchanging another property and gaining direct ownership of it after closing. However, this strategy may be too limiting for some.

May 6, 2025

1031 Exchange Realtors: Understanding Their Role In Real Estate Investments

Home in bright spring sunshine.

Realtors can play a valuable role in property transactions, especially when it comes to navigating the complexities of a 1031 exchange.

May 5, 2025

1031 Exchange Rules: Vacation and Second Home Qualification

A desk with a small house and papers on it.

The IRS has relatively flexible rules on what types of property qualify for a 1031 exchange or like-kind swap. However, there are a few types of real estate that toe the line between investment or personal use property, leading to confusion among new and seasoned investors alike. These assets include vacation homes and second homes.

Apr 29, 2025

Reverse 1031 Exchange: Timeline, Rules, How It Works

Park Square and Office Building

For investors who want to defer taxes, 1031 exchanges remain an appealing option. Thanks to this like-kind exchange, you can swap one property for another without incurring tax liability. Since there is no sale, the IRS doesn’t levy capital gains taxes until you eventually make a constructive receipt. In this process, finding the replacement property comes after selling the relinquished one.

Apr 25, 2025

1031 Exchange Rules and Requirements To Consider

Small wooden house sitting on a stack of papers.

1031 exchanges remain a popular investment route for those who want to defer capital gains taxes. Since you can indefinitely continue the process, you delay tax payments if you grow your initial capital. While this potential is appealing, the IRS has strict 1031 exchange rules and stipulations to help prevent abuse and ensure the tax-deferred status of investors and property owners.

Apr 13, 2025

The Five-Year Rule and 1031 Exchange Impacts

High rise office buildings

In most cases, you can’t use a 1031 exchange to defer capital gains taxes and depreciation recapture on primary residence sales. Properties eligible for a like-kind exchange must be used for investment or business purposes; primary residents don’t fall under this category.

Apr 11, 2025

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