What Is a 1031 Exchange?

Answer

A 1031 exchange lets an investor defer capital-gains tax by reinvesting the proceeds of a sold investment property into a "like-kind" property within strict IRS timelines (45 days to identify, 180 days to close). It defers — not eliminates — the tax.

Named for Section 1031 of the tax code, the exchange lets investors compound gains across properties without an immediate tax bill. The rules are technical and require a qualified intermediary, so investors coordinate closely with their CPA and attorney.

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