1031 Exchange Resource Center

How a 1031 Exchange Works

Sell Property

Close on the sale of your relinquished property. Proceeds go to a Qualified Intermediary.

Engage a QI

A Qualified Intermediary holds your funds and facilitates the exchange documentation.

Identify Replacement

Identify up to 3 potential replacement properties in writing.

45-Day Deadline

Close on New Property

Complete the purchase of your replacement property to finalize the exchange.

180-Day Deadline

Key Rules to Know

Like-Kind Requirement

Both properties must be held for investment or business use. Most real estate qualifies as like-kind to other real estate — you can exchange an office building for raw land, retail space for apartments, or industrial for hospitality.

45-Day Identification Rule

You must identify potential replacement properties within 45 calendar days of selling your relinquished property. This identification must be in writing and signed. Most investors use the 3-property rule.

180-Day Closing Rule

The entire exchange must be completed within 180 calendar days of the original sale. The replacement property closing cannot extend beyond this deadline — no exceptions, no extensions.

Benefits of a 1031 Exchange

Defer Capital Gains

Postpone federal and state capital gains taxes, keeping more equity working for you.

Leverage Equity

Reinvest 100% of your proceeds into a larger or higher-performing property.

Portfolio Diversification

Shift into different property types, markets, or geographic areas without triggering tax.

Wealth Building

Compound your returns over multiple exchanges to build generational real estate wealth.

Frequently Asked Questions

Q1. Can I do a 1031 exchange on my primary residence?

No. Section 1031 only applies to property held for productive use in a trade or business, or for investment. Your primary residence does not qualify. However, if you convert a rental property to a primary residence (or vice versa), special rules may apply — consult a tax advisor.

Q2. What happens if I miss the 45-day identification deadline?

If you fail to properly identify replacement properties within 45 days, the exchange fails entirely. You will owe capital gains taxes on the sale. There are no extensions or exceptions to this deadline, even for weekends or holidays (though if day 45 falls on a weekend/holiday, it extends to the next business day).

Q3. Do I need to use a Qualified Intermediary?

Yes. The IRS requires that a Qualified Intermediary (QI) hold the exchange funds between the sale and purchase. You cannot touch the proceeds at any point, or the exchange will be disqualified. The QI must be an independent third party — your agent, attorney, or accountant cannot serve as QI.

Q4. Can I exchange into multiple properties?

Yes. You can identify up to three replacement properties regardless of their value (the 3-property rule), or any number of properties as long as their combined fair market value does not exceed 200% of the relinquished property's value (the 200% rule). You can close on one or more of your identified properties.

Q5. What is "boot" in a 1031 exchange?

Boot is any non-like-kind property received in the exchange — typically cash or debt relief. If you receive boot, that portion is taxable. For example, if you sell for $1M but only reinvest $900K, the $100K difference is boot and subject to capital gains tax. To fully defer, reinvest all proceeds and acquire equal or greater debt.

Q6. How does Team Utah Commercial help with 1031 exchanges?

Our team specializes in identifying replacement properties that meet your investment criteria within the strict 45-day window. We provide market analysis, property tours, and negotiation support to ensure you close before the 180-day deadline. We also coordinate with your QI, attorney, and tax advisor to keep the exchange on track.

Planning a 1031 Exchange?

Let our team help you find the perfect replacement property. Fill out the form below and we'll be in touch within 24 hours.