Solutions · Deferred
Deferred (Forward) Exchanges
Sell investment real property, reinvest in like-kind real property, and defer the capital gains tax, within the 45-day and 180-day periods.
The deferred exchange is the cornerstone of capital preservation, allowing investors to sell relinquished real property and reinvest the proceeds in like-kind real property. By utilizing a Qualified Intermediary to hold sale proceeds in a segregated, dual-signature account, you maintain a continuous investment thread that can defer federal capital gains tax and depreciation recapture. Full deferral requires replacement property of equal or greater value, reinvestment of all net equity, and replacement of any debt with new debt or cash. State treatment varies; California, for example, tracks deferred gain on Form FTB 3840.
Since exchanges completed after December 31, 2017, §1031 applies only to real property held for productive use in a trade or business or for investment (IRC §1031(a)(1); T.D. 9935).
At Institutional 1031, we bring an institutional rigor to the 180-day exchange period — which ends at the earlier of day 180 or the due date, including extensions, of the return for the year of the transfer. Our team provides proactive guidance through the critical 45-day identification window.
At a Glance
- Defers capital gains tax and recapture
- Segregated, dual-signature account
- Guidance through the 45-day window
- Institutional rigor on the 180-day timeline
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