1031 exchange advisory · Long Beach · Los Angeles · Las Vegas
Every exchange runs on a 45-day identification clock and a 180-day close. The investors who lose money in this process are the ones working with a broker figuring it out as they go. We've already made every mistake there is to make, and built a process around not repeating them.
Before you sell
Before your property ever hits the market, we build a 10-year analysis that models the exchange end to end: your cash flow, your depreciation schedule, and your projected appreciation, both where you are today and where you'll be on the other side. You see exactly what changes, in dollars, before you commit to anything.
Sometimes that analysis says don't exchange. A seller who is close to fully depreciated on a stabilized building in a market that has run may be better served by a different structure entirely. You should know that before you list, not after you've started a clock you can't stop.
The moment you go under contract
The moment your down leg goes under contract, my entire team goes to work on the replacement property at once. That means every active on-market listing, and it means direct calls to brokers across the country we've closed with before, in the markets and product types that fit your objectives.
We don't wait for the 45-day clock to start. The objective is the shortest possible gap between your sale and your replacement, so your cash flow never stops. Most of the pressure people associate with exchanges comes from starting the search on day one instead of six weeks earlier.
Due diligence
We don't hand you a listing and wish you luck. Every replacement property goes through our full due diligence review: financials, leases, physical condition, market position, tenant credit. And I walk the property with you personally.
This is the part of the exchange where a bad decision follows you for a decade. A deadline makes people accept a building they would never have bought with time to spare. Our job is to make sure the clock never becomes the reason you sign.
How the deadlines actually work
Both deadlines begin the day your relinquished property closes — the day title transfers, not the day you go under contract and not the day you list. They run on calendar days, including weekends and federal holidays. There is no extension available except in a federally declared disaster.
Your replacement candidates must be identified in writing, unambiguously described, signed by you, and delivered to your qualified intermediary by midnight on day 45. After that the list is fixed. You cannot swap a property in later, even if the one you identified falls apart.
You must close on the replacement property by day 180 — or by the due date of your tax return for the year of the sale, whichever comes first. That second half catches people, and it's covered below.
A qualified intermediary has to be engaged before your relinquished property closes. If the sale proceeds touch your hands or your own account, the exchange is dead on constructive receipt. Your own agent, attorney, or CPA generally cannot serve as your QI.
To defer the full gain, you generally need to acquire replacement property of equal or greater value and carry equal or greater debt. Cash you take off the table, or debt you shed without replacing, is boot — and boot is taxable.
Identification
Your written identification has to satisfy one of three rules. Most exchanges use the first. The other two exist for buyers assembling several properties or working with uncertain closings.
Identify up to three replacement properties, at any value. You can acquire one, two, or all three. This is the rule most exchanges run on, because it gives you two backups without any math on aggregate value.
Identify any number of properties, as long as their combined fair market value doesn't exceed 200% of what you sold. Useful when you're assembling several smaller assets out of one larger sale.
Identify any number of properties at any value — but you must actually acquire at least 95% of the total value you identified. Miss that threshold and the whole exchange fails. This is a fallback, not a strategy.
Questions we get every week
This is the trap most people don't see coming. Your closing deadline is the earlier of 180 days or your tax return due date for the year of the sale. Sell in November and your return is due in April — which can cut your 180 days down to roughly 150. Filing an extension restores the full 180. Talk to your CPA about the extension before you close, not after.
No. There is no hardship extension, no request form, and no discretion. The only relief comes when the IRS issues disaster relief covering your area, which is rare and outside your control. Plan as though the date is immovable, because it is.
You're limited to whatever else is on your day-45 list. This is precisely why we identify backups and why we start the replacement search the day your down leg goes under contract rather than the day it closes. A list with one property on it is a bet, not a plan.
You can, but it's boot and it's taxable in the year of the sale. The same applies to debt relief: if you carried a $2M loan and replace it with $1.4M, that $600,000 difference is generally treated as boot even though you never saw cash. If you need liquidity from the transaction, we model the tax cost before you list so it's a decision rather than a surprise.
No. Like-kind is broad for real property held for investment or business use. You can exchange apartments for retail, land for industrial, a Long Beach fourplex for a net-leased building in Nevada. What matters is that both are real property held for investment or productive use, and that it's US property for US property.
Yes — that's a reverse exchange, and it's more involved. An exchange accommodation titleholder parks the property until your sale closes. It costs more and needs more lead time, but in a tight market where the right replacement appears before your buyer does, it can be the difference between a good outcome and a rushed one.
We work with intermediaries we've closed with repeatedly and can vouch for, and we'll make introductions. But the QI is your relationship and your choice, and your CPA or attorney may already have one they prefer. What matters is that they're engaged before your sale closes.
Sellers and 1031 buyers
A written opinion of value with in-place and market numbers, recent closed comps, and a 10-year model of what the exchange actually does to your position. No obligation.
This page explains how 1031 exchanges work in general terms and reflects our experience closing them. It is not tax or legal advice, and it isn't a substitute for your own CPA or attorney. Exchange rules have specific requirements that depend on your circumstances, and the numbers in your situation should be reviewed by a qualified tax professional before you act. Tom Watkins is a licensed real estate broker, not a tax adviser or a qualified intermediary.
