---
title: 1033 Exchange
description: 1033 exchange is a method of deferring capital gains taxes on property that is lost involuntary to condemnation, theft, or casualty, and a gain is realized from the insurance or condemnation proceeds.
---

[Realized 1031 Glossary of Terms ](https://www.realized1031.com/glossary)

# [1033 Exchange](https://www.realized1031.com/glossary/1033-exchange)

 Written by [The Realized Team](https://www.realized1031.com/glossary/author/the-realized-team) | Jun 22, 2022 12:00:00 PM

A method of deferring [capital gains taxes](https://www.realized1031.com/glossary/capital-gain-tax) on property that is lost involuntary to condemnation, theft, or casualty, and a gain is realized from the insurance or condemnation proceeds. Although similar in scope to a 1031 exchange, the steps to transacting a 1033 exchange vary significantly. See [Disasters and 1031 Exchanges (Part 2)](https://www.realized1031.com/blog/disasters-and-1031-exchanges-part-2) for a list of these differences.

For example, say John owns property on the east coast. After a hurricane enters the enter, John’s property is completely destroyed, leaving him subject to $200,000 in insurance proceeds. If this money leads to a gain on John’s next tax return, he may be subject to taxes if he does not execute a 1033 exchange within the next four years ([See IRC Section 1033(h)](https://www.law.cornell.edu/uscode/text/26/1033)).

[View full post](https://www.realized1031.com/glossary/1033-exchange)

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