The 1031, in plain English

A 1031 exchange lets you sell an investment property and roll the entire proceeds into another one, with no capital gains tax due now. The gain is deferred, not paid, as long as you follow the rules.

Why it matters

When you sell outright, a chunk of your proceeds goes to taxes, and only what's left keeps working. In a 1031, the full amount keeps working. That difference compounds for years.

The clock is the hard part

• 45 days to identify your replacement property, in writing, from the day you close the sale.
• 180 days to close on it.

Those are calendar days, not business days, and they do not move.

What trips people up

• Use a qualified intermediary. You can't touch the money in between, it has to flow through a QI set up before you close.
• Watch for boot. If you buy cheaper or pull cash out, the difference is taxable. To fully defer, you generally trade up in price and debt.
• Identification rules are specific. There are limits on how many properties you can name and their combined value. Know them before day one, not day 44.

The common move for the owners I work with is to trade a management-heavy building into a hands-off net lease. Same equity, less work, no tax drag, and the rent just shows up. The rules are strict enough that you want to plan the exchange before you list, not after.