🇺🇸 Made in America·100% U.S.-Based Team · 24+ Years in Cost Segregation
📞 1-888-365-5023info@costsegamerica.com
Home/The Playbook/The 1031 Exchange
The Investor's Tax Playbook

The 1031 Exchange, in Plain English. Sell, Buy Again, Pay Nothing Today.

The deadlines, the qualified intermediary, the trap called boot, and how cost segregation applies to the replacement property once the exchange closes.

Get Your Free Proposal →Call 1-888-365-5023
125+ IRS Audits Defended
$0 Ever Returned to the IRS
24+ Years. One Standard.
100% U.S.-Based Team
IRS Approaches 1 and 2
The Answer, First

A 1031 exchange lets you sell investment real estate and roll the full proceeds into replacement property while deferring the capital gains tax. The non-negotiables: a qualified intermediary holds the money (you never touch it), you identify replacement property within 45 calendar days of closing, and you close within 180 calendar days. Buy equal or greater value and reinvest all proceeds, or the difference comes back as taxable boot.

The Essentials
Who it's forInvestors selling one property to buy another
The benefitCapital gains deferred, full equity kept working
What people missCalendar days, not business days; touching the money kills it
AuthorityIRC Section 1031

Elena sold her fourplex on a Tuesday and thought she had plenty of time. Day 44 found her signing an identification letter at 9 p.m., one day inside a deadline that would have converted her entire deferred gain into a current tax bill. The 45 days include weekends and holidays. So do the 180. The calendar is the strategy.

One sale, two endings
✓The exchange done right: intermediary engaged before closing, replacement identified by day 45, closed by day 180, every dollar reinvested, tax deferred in full.
✗The exchange done casually: proceeds touched for a week, or day 46 arrives first, and the full gain is due this year.

The rules in plain English

  1. Engage the qualified intermediary before you close the sale. Once the money touches your account, even briefly, the exchange is dead.
  2. Identify replacement property in writing within 45 calendar days. Close within 180 calendar days of the sale. No extensions for weekends, holidays, or good intentions.
  3. Buy equal or up, and reinvest everything. Take cash out or replace less debt than you retired, and that difference is boot, taxable now.
  4. Then the stacking play: after the replacement closes, a cost segregation study on the new building creates fresh first-year deductions on the very property your deferred gain just rolled into. Deferral on the way out, acceleration on the way in.
The Catch

Day 46 means the full tax bill, no appeals. Touch the proceeds for a day and the exchange is dead. Buy cheaper or borrow less than you sold and the difference comes back as taxable boot. The deferral is real; the calendar is the price.

Questions owners actually ask

Are the 45 and 180 days business days?
No. Calendar days, including weekends and holidays. Day one is the day after your sale closes.
Can I hold the sale money until I find the next property?
No. A qualified intermediary must hold the proceeds. Money in your control, even briefly, disqualifies the exchange.
Can I do cost segregation on the replacement property?
Yes, and it is the classic stack: the exchange defers the old gain while a study accelerates new deductions on the replacement. The sequencing details belong to your CPA, and our full 1031 guide covers them.
The Bigger Play

Elena's deferral protected the gain she had already earned. The replacement building is where the next gain hides: most owners sit on $200,000 to $450,000 per million in unclaimed deductions. You beat the calendar. Now send the engineers into the new building.

SEE YOUR BUILDING'S NUMBERFREE PROPOSAL IN 24 HOURS
Continue the education
The full 1031 Exchange technical guide, timing and Form 8824 →The Step-Up in Basis: the last page forgives everything →Cost Segregation: the biggest play in the book →
The Cost Seg America Team
Cost Seg America · Engineered, Not Estimated · 1-888-365-5023 · info@costsegamerica.com
The Investor's Tax Playbook is educational. It is not tax, legal, or accounting advice, and reading it does not create a client relationship. Dollar thresholds and rates adjust annually. Execute every strategy with your CPA or qualified tax professional.