1031 Exchange Rules Coldwell Banker Northern California
San Francisco Market Street Office

1031 Exchange Rules

Following are some of the important rules that you need to follow if you choose to do a tax-free 1031 Exchange:
  1. 1031 Exchanges only apply to a property which has been in rental service.
  2. All of the proceeds of your sale must be used to buy your trade property.  There will be a tax on any portion of the funds not used.
  3. Your leg-up property must be equal to or higher than the sales price of the property you sold.
  4. The property you buy must be of "like kind."  This means that it can only be real estate that produces a current or anticipated income.
  5. You must identify your leg-up within 45 days after selling your current property and complete the purchase within 180 days.
Finally, before considering a 1031 Exchange, we urge you again to meet with your tax and financial advisors so that you can make an informed decision about whether this is the best way to handle the sale of your property.  We also strongly recommend using a local 1031 Exchange Service, like First Guaranty Exchange at 1-800-522-1031.

We are not accountants or CPAs.  It is essential to review these matters with your financial advisor and CPA.