Section 1031 of the Internal Revenue Code is one of the most powerful tools available to real estate investors. In many ways, it is a gift, allowing investors to defer capital gains taxes when exchanging investment property for other investment real estate.
But like most gifts, it’s important that we use it wisely. Holding onto your current property, instead of selling and doing a 1031 exchange, is often the best decision you can make. The decision to not sell and exchange, but rather be grateful/hold onto what you currently have. My rule for selling a property is that I will only sell an investment property, if I use the funds to purchase a better property. I hold this principal highly, knowing that I have made mistakes with my own local properties and 1031 exchanges.
A 1031 exchange should not simply defer taxes. The real goal is to use the exchange to place ourselves, as investors, in a stronger position after the transaction. That might mean improving cash flow, investing in a better location, reducing management responsibilities, increasing diversification, or repositioning into properties and markets with stronger long-term fundamentals.
My1031.com was created to help investors make those decisions thoughtfully and strategically.
A Practical Guide to the 1031 Exchange
Your 1031 Planning Dashboard
The first step in any successful exchange is understanding the numbers, the timeline, and the available strategies.
Rather than starting with property listings or product pitches, this site is designed as a 1031 planning dashboard, a place where investors can evaluate their situation and make informed decisions before moving forward.
At the top of the process are three tools designed to solve the most common challenges investors face during an exchange.
Before deciding what to do next, investors need a clear understanding of the potential tax exposure from selling their property.
Our Exchange Tax Impact Calculator helps estimate:
Federal capital gains taxes
Depreciation recapture
State tax exposure
Net proceeds after taxes
Potential tax deferral through a 1031 exchange
By understanding the numbers first, investors can better evaluate whether an exchange makes sense and how much capital they may want to redeploy. Here is a 1031 Exchange Capital Gains Calculator to Help Determine What Taxes will be owed on the sale of the property in question:
Track Your 1031 Exchange Timeline
The timeline of a 1031 exchange moves quickly.
Once your relinquished property closes, the Internal Revenue Code allows only 45 days to identify replacement properties and 180 days to complete the exchange.
Missing either deadline can disqualify the exchange and trigger immediate capital gains taxes.
Use the 1031 Exchange Deadline Calculator and Reminder Tool to enter your closing date and automatically track these important milestones.
You can also opt to receive periodic email reminders as the deadlines approach to help ensure nothing is overlooked.