🇺🇸 United States

US 1031 Exchange: timing, replacement value and boot

A practical guide to planning a 1031 real-estate exchange around qualifying use, 45/180-day deadlines and taxable boot.

Reviewed: August 25, 2026 · Luís Castanheira

A Section 1031 exchange can defer qualifying gain when the relinquished and replacement real properties are held for investment or business. It is not automatic, and the transaction must be designed around identification, completion and value or debt differences.

Before you act

1.Confirm investment or business use of both properties before relying on an exchange.
2.Calendar the 45-day identification and 180-day completion deadlines before closing the relinquished property.
3.Model cash received, debt reduction and replacement value with a qualified intermediary.

Worked example: Example in Texas

An investor sells a rental held for investment and plans to acquire a higher-value replacement property. The timeline starts on the sale closing date; cash retained or debt not replaced can create taxable boot even if a new property is purchased.

The operational calendar and reinvestment structure matter as much as the sale gain.

Calculator

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FAQ

Does a 1031 exchange eliminate tax?

It may defer qualifying gain; it is not a blanket exemption and special facts can create taxable amounts.

Can the seller hold the sale proceeds?

The handling of proceeds is critical and should be structured with an appropriate qualified intermediary.