Don’t Miss Out on a 1031 Exchange: What Homeowners and Investors Need to Know

If you or your clients are thinking about selling an investment property, one of the smartest tax strategies to consider is a 1031 Exchange. This powerful tool lets you defer capital gains taxes by reinvesting the proceeds into another like-kind property. But here's the catch: timing is everything—and we get questions about it all the time.

❓ “Can I start a 1031 Exchange after the property has already sold?”

Unfortunately, the answer is no. One of the most common mistakes we see is when clients call after closing, hoping to start a 1031 Exchange. By then, it’s too late.

To successfully complete a 1031 Exchange, the process must begin before the property sale closes. That means:

  • The 1031 Exchange must be opened while the property is still in escrow.

  • You (the Exchanger) must sign the exchange agreement prior to closing.

  • If you’re doing a reverse exchange (buying first), the paperwork must be signed before the purchase closes.

📄 What’s in the Exchange Agreement?

When working with a Qualified Intermediary (like our trusted partner Secure Exchange), your exchange agreement will include:

  • Assignment of rights

  • Notice to the buyer

  • Escrow and wiring instructions

  • Legal language that defines the transaction as an exchange (not a taxable sale)

All of these documents are essential to meet IRS requirements and keep your exchange tax-deferred.

🏡 Why Should Real Estate Agents Bring Up 1031 Exchanges Early?

Many sellers of investment or income-generating properties have no idea about 1031 Exchanges until after the sale is complete—and by then, the tax-saving opportunity is gone.

That’s why it’s so important for agents to bring up 1031s early in the selling conversation, especially if:

  • Your client is selling a rental, commercial, or multi-family property

  • They’re planning to reinvest in real estate

  • They’re concerned about capital gains taxes

⏳ Quick 1031 Exchange Timeline Highlights

  • Before Closing: Contact a Qualified Intermediary and sign the exchange agreement

  • Day 1: Closing day on the relinquished property

  • Within 45 Days: Identify potential replacement properties

  • Within 180 Days: Complete the purchase of one or more replacement properties

✅ Pro Tip for Investors

Even if you’re not 100% sure a 1031 Exchange is the right move, starting the conversation before closing gives you the option. Once you close, the window is gone—and you’re stuck with the tax bill.

📞 Have questions about whether your sale qualifies for a 1031 Exchange or want help connecting with a Qualified Intermediary like Secure Exchange? Reach out today—I'm here to help!

Comments

Post a Comment

Popular posts from this blog

The Beauty and Burden of Trees in the Pacific Northwest — What Every Homeowner Should Know

Living in the Pacific Northwest has its perks—breathtaking mountain views, crisp coastal air, and of course, the towering evergreens that frame our landscapes like a scene from a nature documentary. But as any longtime resident will tell you, those beautiful trees can also cause serious stress when the wind picks up. Tree branches fall, trunks sway, and suddenly you're wondering if that majestic fir in your backyard is more of a hazard than a treasure. Whether you’re a homeowner preparing to sell, just settling into your dream property, or maintaining your investment for the long term, understanding tree health, maintenance, and safety is essential. (Disclaimer: Some of the links on here are affiliate links and I may earn if you click or buy on them, AT NO EXTRA cost to you. Hope you find the information here useful! Thanks.)  🌲 Signs Your Tree May Need Help While many trees are resilient, they can suffer from disease, rot, or damage over time. Here are some signs your tree mi...
Read more

What Are Seller Concessions in Real Estate? Here’s What You Need to Know

Image
When buying a home, you’re likely focused on the price tag, but don’t forget about the extra costs that can add up quickly. Things like closing fees, home inspections, and repairs can eat into your budget. Luckily, in some cases, you can ask the seller to help cover some of these costs through what’s known as seller concessions. Here's a breakdown of what they are and how they can work to your advantage. What Are Seller Concessions? Seller concessions are when the seller agrees to cover a portion of the buyer's closing costs or expenses, reducing the upfront costs for the buyer. For example, the seller might pay for repairs found during the home inspection or cover fees like the appraisal. The seller doesn’t have to agree, but it can be a good way to keep the deal moving forward and make the buyer happy. It’s important to note that seller concessions don’t mean the buyer will get cash back. Instead, the seller typically agrees to put part of their home sale proceeds toward the ...
Read more

The Pros and Cons of Air Fryers: Is the Emeril Lagasse Extra Large French Door Air Fryer Toaster Oven Right for You?

 Air fryers have become a staple in modern kitchens, offering a convenient way to enjoy crispy, fried-like foods with less oil. But are they really worth the hype? If you're considering adding one to your home, whether for personal use or as an upgrade to a rental property, it's important to weigh the benefits and drawbacks. Let's dive into the pros and cons of air fryers and see how the Emeril Lagasse Extra Large French Door Air Fryer Toaster Oven compares to other options on the market. (Disclaimer: Some of the links on here are affiliate links and I may earn if you click or buy on them, AT NO EXTRA cost to you. Hope you find the information here useful! Thanks.)  Pros of Air Fryers ✅ Healthier Cooking – Air fryers use significantly less oil than traditional frying methods, making meals lower in fat and calories while still providing a crispy texture. ✅ Versatility – Many air fryers, like the Emeril Lagasse model, come with multiple cooking functions. From air frying t...
Read more