{"id":134564,"date":"2021-04-19T13:30:00","date_gmt":"2021-04-19T19:30:00","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=134564"},"modified":"2023-05-10T11:37:24","modified_gmt":"2023-05-10T17:37:24","slug":"1031-exchange-pros-cons","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/1031-exchange-pros-cons","title":{"rendered":"Will a 1031 Exchange Help Grow Your Portfolio?"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm?e=BIGPOC5987170123&#038;light=false\" width=\"100%\"><\/iframe>  \n\n\n\n\n<p class=\"wp-block-paragraph\">We all know the basic benefits of real estate investment: cash flow, growing equity, tax advantages, and much more. However, there are many strategies and tools available to make your portfolios and investments even more valuable.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">My family\u2019s business has been out in front of the turnkey real estate investment niche for almost 20 years. We\u2019ve seen it all. The biggest mistake we\u2019ve seen is not understanding how to reposition your portfolio for an exit strategy. Having an understanding of exit strategies is massively important no matter whether you intend to hold a property for five years or decades<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Too often investors think of exit strategies in a negative way. Sometimes exit strategies are part of the plan to grow and diversify, and 1031 exchanges as an exit strategy are definitely not a negative thing.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A 1031 exchange is one of the best strategies to have in mind as a real estate investor. But what is it and when should you make an exchange?<\/p>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n<div id=\"hero-block_62ee867235a1c\" class=\"first:mt-0 hero-block py-4    has-background has-slate-300-background-color has-text-color has-slate-800-color\">\n    <div\n        class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 lg:w-2\/3 \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-slate-color has-text-color has-large-font-size wp-block-paragraph\" style=\"font-style:normal;font-weight:800\">Dreading tax season?<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color wp-block-paragraph\" style=\"font-size:16px\">Not sure how to maximize deductions for your real estate business? In <em>The Book on Tax Strategies for the Savvy Real Estate Investor<\/em>, CPAs Amanda Han and Matthew MacFarland share the practical information you need to not only do your taxes this year\u2014but to also prepare an ongoing strategy that will make your next tax season that much easier.<\/p>\n\n\n\n<div id=button-custom-event-block_641384b1eb1d8 class='button-custom-event'>\n      <a\n    href=\"https:\/\/store.biggerpockets.com\/products\/tax-strategies-book-bundle?utm_source=blog&#038;utm_medium=blog%20banner\"\n        x-on:click=\"window.analytics.track('Blog Block | Publishing: Taxes Bundle', {\n      referrer: 'https:\/\/www.biggerpockets.com\/blog\/1031-exchange-pros-cons',\n    });\"\n    class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Get Yours Now<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\"lg:w-1\/3 first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/04\/tax-strategies-books.png\" alt=\"\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\">The 1031 exchange rundown<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Before I dive into the 1031 exchange details, let\u2019s talk in terms of basics. A 1031 exchange is when an investor swaps one property for another property (or properties) while deferring capital gains taxes.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The name of the exchange comes from the IRS code Section 1031. Because we\u2019re dealing with the IRS and taxes, it\u2019s extremely important to get this done right. Real estate investors have the distinct advantage of tax deferrals, exemptions, and incentives. A mistake in this area can have significant ramifications on the bottom line.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Quick things to note<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>There is no limit to how many times a 1031 exchange can be performed.<\/li>\n\n\n\n<li>Properties exchanged must be like-kind in the eyes of the IRS and be used for either investment or business purposes. Vacation and secondary homes are subject to specific limitations.<\/li>\n\n\n\n<li>The 1031 exchange does not necessarily have to be a trade of one property for one property.<\/li>\n\n\n\n<li>An exchange cannot be made if either property is \u201cstock in trade.\u201d Homes built and sold by developers are \u201cstock in trade.\u201d Flipped properties immediately put on the market after improvements are \u201cstock in trade.\u201d If an investor does not hold a property for investment and immediately tries to use the property for another exchange, the property may not qualify.<\/li>\n\n\n\n<li>Personal or intangible property cannot be exchanged.<\/li>\n\n\n\n<li>If there is a price disparity between exchanged properties (if you buy something cheaper), there are tax considerations in the difference.<\/li>\n\n\n\n<li>If you exchange mortgage liabilities, the difference in the outstanding debt, if lower than your previous liability, is considered \u201cboot\u201d and is taxable as capital gains.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Real estate investors who want to use this strategy must consult a professional intermediary. Your tax advisor, financial planner, or CPA should be made aware of your intent to perform an exchange well before it happens. This is to ensure that you do not miss any steps, deadlines, or qualifiers. The <a href=\"https:\/\/www.irs.gov\/pub\/irs-news\/fs-08-18.pdf\" target=\"_blank\" rel=\"noopener\">IRS has special rules for 1031 exchange<\/a> programs and it is important that you hit those rules perfectly.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How a 1031 exchange happens<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">This is, in basic terms, the process of completing a 1031 exchange:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>A property is put on the market for sale. This is your \u201crelinquished property.\u201d Once it is under contract, the process really begins.<\/li>\n\n\n\n<li>Identify a qualified intermediary (QI), also known as an accommodator or facilitator. They can be independent or institutional. Because you cannot hold any of the money made from the sale of your relinquished property, your QI will hold the funds until you identify a replacement property. Once the property is identified, the funds are released to acquire it. Before you close on the sale of your relinquished property, you must have a qualified intermediary. If you do not, you will be disqualified from this particular exchange.<\/li>\n\n\n\n<li>Identify your replacement property within 45 days of the close of sale on your relinquished property. Within 45 calendar days, your qualified intermediary must be notified of your replacement property.<\/li>\n\n\n\n<li>Close the deal within 180 days of the closing on your relinquished property\u2014not from the identification of the replacement. You cannot amend a tax return to include an exchange, so you should wait to file annual taxes for the calendar year in which the exchange occurred until the exchange is complete.<\/li>\n\n\n\n<li>Talk to your tax advisor or CPA once the exchange is complete so that the proper forms can be prepared for filing.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\">How a 1031 exchange benefits investors<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Now that we have a basic idea of what a 1031 exchange entails, why should an investor pursue this option? Believe it or not, the benefits of a like-kind exchange go far beyond just tax deferral.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Tax benefits<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Of course, tax benefits are one of the biggest advantages to a 1031 exchange. Because your exchange is tax-deferred, you do not have to pay capital gains taxes for the sale of your sold property. You only have to pay these down the line should you choose to sell other existing investment properties (provided you are not performing another exchange). Depreciation recapture taxes are also deferred.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This essentially makes it so an investor only has to pay capital gains taxes once<em>. <\/em>This is enormously beneficial in a scenario where there is no outstanding debt on the property and it has appreciated seemingly to its limit. An investor can \u201ctrade up\u201d to a more suitable investment while avoiding these costly taxes.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Market access &amp; diversification<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/www.kiplinger.com\/real-estate\/real-estate-investing\/601684\/how-to-build-a-diversified-real-estate-investment\" target=\"_blank\" rel=\"noopener\">Portfolio diversification is key to success in real estate investment<\/a>. That much we know. That doesn\u2019t mean, however, that we\u2019re always in the right markets.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Part of what 2020 showed the real estate world was that the expensive coastal cities aren\u2019t all they\u2019re cracked up to be. They may have a long-lauded reputation with some investors, but volatility in the markets tends to shake these markets first and most. As market desirability shifts, we find ourselves looking inland to smaller but growing investment markets.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A 1031 exchange allows an investor to capitalize on a new market while also removing themselves from a market that has experienced a downturn. No matter the reason, a 1031 is a great way to rest.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Because an exchange does not have to be one-for-one, an investor could theoretically exchange one high-value investment property, such as a multifamily unit or commercial building, for a whole portfolio of smaller, more stable, and more consistent real estate investments.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Access to new markets and varied asset classes is a great benefit.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Pivoting your strategy<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Are you unhappy with your real estate investments? A 1031 exchange can be a way to \u201cunload\u201d an under-performing property in exchange for something more valuable. If you want to invest in a new type of property, a 1031 exchange accomplishes this with lower personal cost to you.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If you own an investment or business property that appreciated but has other consistent issues or poor performance, you can use the exchange as an opportunity to gain a higher-value property. A higher-value property can then help generate more cash flow and increase your overall equity.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Resetting depreciation<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">In real estate, depreciation is used to deduct the costs of renovating or maintaining a property over its \u201cuseful life.\u201d The IRS says this is 27.5 years, and depreciation benefits are spread across that timeframe. Unfortunately, assessors aren\u2019t usually up-to-date on your property\u2019s improvements and its value unless there has been a sale. Your depreciation value, then, usually has to do more with its value at purchase and the appreciation you may have gained since.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In a way, a 1031 exchange allows you to \u201creset\u201d depreciation. You can utilize the appreciated value of your sold property to acquire an investment where depreciation will be more on-par with the property\u2019s actual value.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">1031 exchange pitfalls<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">As with anything in investing, there are risks involved. A like-kind exchange is no different. There are some major considerations to be had before you engage in an exchange. After all, no strategy is one-size-fits-all and the challenges posed by a 1031 exchange may be enough to deter you from trying it yourself. Remember, consult a <a href=\"https:\/\/www.cpajournal.com\/2016\/10\/01\/selecting-a-qualified-intermediary-for-a-like-kind-exchange\/\" target=\"_blank\" rel=\"noopener\">qualified intermediary<\/a> early.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Tight timeline<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Perhaps one of the biggest challenges in performing a successful 1031 exchange is the timeline. You have a total of 180 days to complete the process, plus a 45-day deadline in the middle. While 180 days seems like quite some time, that six months or so will go by in a flash.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Because buy-and-hold real estate investors are often used to a more relaxed, passive approach to real estate, handling the deadlines and time-intensive decision-making may prove more challenging than expected.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Investors should prepare for a 1031 exchange far in advance. It is not a venture to take on spur of the moment. Finding a like-kind property can be difficult and overwhelming. Investors will want resources and contacts in place for finding and facilitating an exchange ahead of time. This way, there will be less pressure on you to meet the deadlines because finding and closing on a suitable property becomes that much easier.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">The boot<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">I mentioned \u201cboot\u201d earlier. This refers to any residual earnings from your sold property. Residual earnings would be where your new property was bought at a price lower than the cash you received from the sale. This extra leftover cash is called \u201cboot.\u201d The qualified intermediary will return these funds to you once the exchange is complete, but at a cost.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Capital gains taxes are due on any amount leftover in an exchange. This is also true of liability, as I mentioned earlier. If you had $200,000 worth of liability on a single property and exchanged it for a property with only $150,000 outstanding in liability, the difference is also treated as boot and is thus taxable.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Starting too late<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Perhaps the biggest thing I see is investors who decide they want to do a 1031 exchange at the last minute. At that point, it\u2019s usually too late to qualify. Again, you want to establish your intent to exchange with your team and advisors and have a qualified intermediary lined up. While the process doesn\u2019t start until you have closed on the property you are selling, you must be prepared long before that point.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Inform the relevant parties and get your QI established. This will allow the process to move smoothly and successfully.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">A parting word<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">My real piece of advice to you as a real estate investor is to consult with professionals that you trust. Then be patient. Don\u2019t rush into any decisions and certainly don\u2019t just use a 1031 exchange because it sounds like a good idea. Understand what you are trying to accomplish and why.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Where taxes are concerned, you can rest assured that there will be a lot of information to wrap your mind around. This is only a basic overview of <a href=\"https:\/\/www.biggerpockets.com\/blog\/1031-exchange\" target=\"_blank\" rel=\"noreferrer noopener\">how a 1031 exchange works<\/a>, and why.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If you\u2019re interested in an exchange, talk to your CPA, tax or wealth advisor, or a trusted investment company that can help you through the process. The sooner you do this, the more clear and intentional your next steps will be.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The main reason for a 1031 exchange is growth and efficiency. This means that before you start, make sure you know what you want to accomplish as an investor. Know what kind of properties you want and where, and what kind of owner you want to be. This is a great tool to use, but only if it is moving you toward your goals.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Ultimately, when you know yourself as an investor and have your sights set on long-term goals, you will best be able to determine whether or not a 1031 exchange is right for you.<\/p>\n\n\n\n  <div id=\"posts_lists-block_606e2ece44cfb\" class=\"  my-10\">\n    <div class=\"\">\n      <!-- Column One -->\n      <div>\n                  <h2 class=\"mt-0 mb-1 js-toc-ignore\">\n            More on 1031 exchanges          <\/h2>  \n                  \n        \n        \n        <div class=\"grid grid-cols-1 gap-y-4 lg:gap-y-7 mt-5\">\n          \n<article \n\tid=\"post-134967\" \n\tclass=\"content-card mb-0 flex flex-col  post-134967 post type-post status-publish format-standard has-post-thumbnail hentry category-biggerpockets-daily category-real-estate-investing-for-beginners tag-business tag-business-comm tag-real-estate-investing-basics tag-taxes-2\">\n\n\t<header class=\"entry-header\">\t\t\t\n\t\t<!-- Image -->\n        \t\t\t<a class=\"post-thumbnail\" href=\"https:\/\/www.biggerpockets.com\/blog\/tax-considerations-real-estate\" target=\"_blank\" aria-hidden=\"true\" tabindex=\"-1\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"332\" height=\"225\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/03\/maximize-taxes-1-2-560x380.png\" class=\"size-card w-full  m-0 aspect-[68\/45] object-scale-down wp-post-image\" alt=\"Maximize Your Tax Returns This April With These Smart Maneuvers\" title=\"\">\t\t\t<\/a>\n\t\t        \n\n\t\t<!-- Content Wrapper -->\n\t\t<div class=\"py-4 \">\t\n                            <div class=\"flex gap-4 justify-between items-center\">\n                    <!-- Category  -->\n                                            <a href=\"https:\/\/www.biggerpockets.com\/blog\/category\/taxes\" class=\"transition-colors bg-themeBlue\/20 text-themeBlue-medium hover:bg-themeBlue hover:text-white px-2 py-1 mb-2 inline-block rounded-sm no-underline text-sm\" target=\"_blank\">Taxes<\/a>\n                    \n                                            <span class=\"text-sm text-gray-500 hidden lg:inline-block\">7 min read<\/span>\n                                    <\/div>\n            \n           <div class=\"flex gap-3 items-center my-2 flex-nowrap text-base\">\n                <!-- Avatar and Author Name -->\n                <img decoding=\"async\" src=\"https:\/\/bp-wp-migration.s3.amazonaws.com\/author_avatars\/676.jpg\" class=\"w-8 h-8 object-cover my-0 inline-block rounded-full\" alt=\"\" title=\"\"><span class='leading-snug text-slate-500 flex items-center'><span class='hidden whitespace-nowrap sm:inline-block md:hidden lg:inline-block pr-1'><span class='posted-on'><time class=\"entry-date published\" datetime=\"2021-04-01T13:30:00-06:00\">Apr 01, 2021<\/time><time class=\"updated\" datetime=\"2023-04-19T12:08:30-06:00\">Apr 19, 2023<\/time><\/span><\/span>&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/contributors\/chrisclothier\" class=\"no-underline line-clamp-1\" target=\"_blank\">Chris Clothier<\/a><\/span>            <\/div>\n\n            <!-- Post title -->\n\t\t\t<h2 class=\"entry-title js-toc-ignore mt-4 mb-0 text-xl leading-snug text-left\">\n\t\t\t\t<a href=\"https:\/\/www.biggerpockets.com\/blog\/tax-considerations-real-estate\" rel=\"bookmark\" class=\"whitespace-normal no-underline font-bold  text-slate visited:text-slate hover:text-themeBlue\" target=\"_blank\">\n\t\t\t\t\tMaximize Your Tax Returns This April With These Smart Maneuvers\t\t\t\t<\/a>\n\t\t\t<\/h2>\n\t\t\t\n                        <p class=\"text-lg font-normal mt-3 text-slate-500 mb-1 line-clamp-3\">As real estate investors, we look for ways to reduce our effective tax rate. Here&#8217;s how to tap into under-utilized strategies so that you can maximize your success in real&hellip;<\/p>\n\t\t<\/div>\n\t<\/header>\n     <footer class=\"flex justify-between mt-auto\">\n        <!-- Comment Count -->\n        \t\t<span class='flex items-center space-x-2 text-sm' x-cloak x-data='commentCount()' :class=\"parseFloat(commentCount) < 1 || commentCount == '' ? 'hidden' : 'flex'\">\n\t\t\n            <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-5 w-5 text-slate text-opacity-50\" fill=\"none\" viewBox=\"0 0 24 24\" stroke=\"currentColor\">\n                <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M17 8h2a2 2 0 012 2v6a2 2 0 01-2 2h-2v4l-4-4H9a1.994 1.994 0 01-1.414-.586m0 0L11 14h4a2 2 0 002-2V6a2 2 0 00-2-2H5a2 2 0 00-2 2v6a2 2 0 002 2h2v4l.586-.586z\" \/>\n            <\/svg>\n\n            <span x-ref=\"comment_count\" class=\"disqus-comment-count text-slate text-opacity-80\" data-disqus-identifier=\"134967\">\n\t\t\t\t\t\t\t<\/span>\n        <\/span>\n\t    <\/footer>\n<\/article><!-- #post-134967 -->\n<article \n\tid=\"post-76106\" \n\tclass=\"content-card mb-0 flex flex-col  post-76106 post type-post status-publish format-standard has-post-thumbnail hentry category-deal-analysis\">\n\n\t<header class=\"entry-header\">\t\t\t\n\t\t<!-- Image -->\n        \t\t\t<a class=\"post-thumbnail\" href=\"https:\/\/www.biggerpockets.com\/blog\/2015-12-17-1031-exchanges-rules\" target=\"_blank\" aria-hidden=\"true\" tabindex=\"-1\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"340\" height=\"163\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2015\/12\/1031-exchange-rules.jpg\" class=\"size-card w-full  m-0 aspect-[68\/45] object-scale-down wp-post-image\" alt=\"2 Make-or-Break Rules to Follow for a Successful 1031 Exchange\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2015\/12\/1031-exchange-rules.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2015\/12\/1031-exchange-rules-300x144.jpg 300w\" sizes=\"auto, (max-width: 340px) 100vw, 340px\" title=\"\">\t\t\t<\/a>\n\t\t        \n\n\t\t<!-- Content Wrapper -->\n\t\t<div class=\"py-4 \">\t\n                            <div class=\"flex gap-4 justify-between items-center\">\n                    <!-- Category  -->\n                                            <a href=\"https:\/\/www.biggerpockets.com\/blog\/category\/buying-selling\/deal-analysis\" class=\"transition-colors bg-themeBlue\/20 text-themeBlue-medium hover:bg-themeBlue hover:text-white px-2 py-1 mb-2 inline-block rounded-sm no-underline text-sm\" target=\"_blank\">Finding Deals<\/a>\n                    \n                                            <span class=\"text-sm text-gray-500 hidden lg:inline-block\">3 min read<\/span>\n                                    <\/div>\n            \n           <div class=\"flex gap-3 items-center my-2 flex-nowrap text-base\">\n                <!-- Avatar and Author Name -->\n                <img decoding=\"async\" src=\"https:\/\/bp-wp-migration.s3.amazonaws.com\/author_avatars\/1178.jpg\" class=\"w-8 h-8 object-cover my-0 inline-block rounded-full\" alt=\"\" title=\"\"><span class='leading-snug text-slate-500 flex items-center'><span class='hidden whitespace-nowrap sm:inline-block md:hidden lg:inline-block pr-1'><span class='posted-on'><time class=\"entry-date published\" datetime=\"2015-12-17T12:00:07-07:00\">Dec 17, 2015<\/time><time class=\"updated\" datetime=\"2021-03-16T11:49:45-06:00\">Mar 16, 2021<\/time><\/span><\/span>&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/contributors\/amandahan\" class=\"no-underline line-clamp-1\" target=\"_blank\">Amanda Han<\/a><\/span>            <\/div>\n\n            <!-- Post title -->\n\t\t\t<h2 class=\"entry-title js-toc-ignore mt-4 mb-0 text-xl leading-snug text-left\">\n\t\t\t\t<a href=\"https:\/\/www.biggerpockets.com\/blog\/2015-12-17-1031-exchanges-rules\" rel=\"bookmark\" class=\"whitespace-normal no-underline font-bold  text-slate visited:text-slate hover:text-themeBlue\" target=\"_blank\">\n\t\t\t\t\t2 Make-or-Break Rules to Follow for a Successful 1031 Exchange\t\t\t\t<\/a>\n\t\t\t<\/h2>\n\t\t\t\n                        <p class=\"text-lg font-normal mt-3 text-slate-500 mb-1 line-clamp-3\">Perhaps you have heard the term 1031 or like-kind exchange, or maybe you have already gone through the process before. Either way, before you jump into your next exchange, make&hellip;<\/p>\n\t\t<\/div>\n\t<\/header>\n     <footer class=\"flex justify-between mt-auto\">\n        <!-- Comment Count -->\n        \t\t<span class='flex items-center space-x-2 text-sm' x-cloak x-data='commentCount()' :class=\"parseFloat(commentCount) < 1 || commentCount == '' ? 'hidden' : 'flex'\">\n\t\t\n            <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-5 w-5 text-slate text-opacity-50\" fill=\"none\" viewBox=\"0 0 24 24\" stroke=\"currentColor\">\n                <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M17 8h2a2 2 0 012 2v6a2 2 0 01-2 2h-2v4l-4-4H9a1.994 1.994 0 01-1.414-.586m0 0L11 14h4a2 2 0 002-2V6a2 2 0 00-2-2H5a2 2 0 00-2 2v6a2 2 0 002 2h2v4l.586-.586z\" \/>\n            <\/svg>\n\n            <span x-ref=\"comment_count\" class=\"disqus-comment-count text-slate text-opacity-80\" data-disqus-identifier=\"76106\">\n\t\t\t\t\t\t\t<\/span>\n        <\/span>\n\t    <\/footer>\n<\/article><!-- #post-76106 -->\n<article \n\tid=\"post-112697\" \n\tclass=\"content-card mb-0 flex flex-col  post-112697 post type-post status-publish format-standard has-post-thumbnail hentry category-real-estate-business-management\">\n\n\t<header class=\"entry-header\">\t\t\t\n\t\t<!-- Image -->\n        \t\t\t<a class=\"post-thumbnail\" href=\"https:\/\/www.biggerpockets.com\/blog\/closing-costs-1031-exchanges\" target=\"_blank\" aria-hidden=\"true\" tabindex=\"-1\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"340\" height=\"163\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/02\/calculator.jpg\" class=\"size-card w-full  m-0 aspect-[68\/45] object-scale-down wp-post-image\" alt=\"What Investors Should Know About 1031 Exchange Closing Costs\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/02\/calculator.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/02\/calculator-300x144.jpg 300w\" sizes=\"auto, (max-width: 340px) 100vw, 340px\" title=\"\">\t\t\t<\/a>\n\t\t        \n\n\t\t<!-- Content Wrapper -->\n\t\t<div class=\"py-4 \">\t\n                            <div class=\"flex gap-4 justify-between items-center\">\n                    <!-- Category  -->\n                                            <a href=\"https:\/\/www.biggerpockets.com\/blog\/category\/managing-scaling\/real-estate-business-management\" class=\"transition-colors bg-themeBlue\/20 text-themeBlue-medium hover:bg-themeBlue hover:text-white px-2 py-1 mb-2 inline-block rounded-sm no-underline text-sm\" target=\"_blank\">Real Estate Business Management<\/a>\n                    \n                                            <span class=\"text-sm text-gray-500 hidden lg:inline-block\">2 min read<\/span>\n                                    <\/div>\n            \n           <div class=\"flex gap-3 items-center my-2 flex-nowrap text-base\">\n                <!-- Avatar and Author Name -->\n                <img decoding=\"async\" src=\"https:\/\/bp-wp-migration.s3.amazonaws.com\/author_avatars\/3019.jpg\" class=\"w-8 h-8 object-cover my-0 inline-block rounded-full\" alt=\"\" title=\"\"><span class='leading-snug text-slate-500 flex items-center'><span class='hidden whitespace-nowrap sm:inline-block md:hidden lg:inline-block pr-1'><span class='posted-on'><time class=\"entry-date published\" datetime=\"2019-07-02T14:30:52-06:00\">Jul 02, 2019<\/time><time class=\"updated\" datetime=\"2023-05-19T12:02:53-06:00\">May 19, 2023<\/time><\/span><\/span>&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/contributors\/davefoster\" class=\"no-underline line-clamp-1\" target=\"_blank\">Dave Foster<\/a><\/span>            <\/div>\n\n            <!-- Post title -->\n\t\t\t<h2 class=\"entry-title js-toc-ignore mt-4 mb-0 text-xl leading-snug text-left\">\n\t\t\t\t<a href=\"https:\/\/www.biggerpockets.com\/blog\/closing-costs-1031-exchanges\" rel=\"bookmark\" class=\"whitespace-normal no-underline font-bold  text-slate visited:text-slate hover:text-themeBlue\" target=\"_blank\">\n\t\t\t\t\tWhat Investors Should Know About 1031 Exchange Closing Costs\t\t\t\t<\/a>\n\t\t\t<\/h2>\n\t\t\t\n                        <p class=\"text-lg font-normal mt-3 text-slate-500 mb-1 line-clamp-3\">Planning for a 1031 exchange can seem intimidating. As with many areas of the tax code, understanding what the IRS allows and doesn&#8217;t allow is not always crystal clear. Learn&hellip;<\/p>\n\t\t<\/div>\n\t<\/header>\n     <footer class=\"flex justify-between mt-auto\">\n        <!-- Comment Count -->\n        \t\t<span class='flex items-center space-x-2 text-sm' x-cloak x-data='commentCount()' :class=\"parseFloat(commentCount) < 1 || commentCount == '' ? 'hidden' : 'flex'\">\n\t\t\n            <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-5 w-5 text-slate text-opacity-50\" fill=\"none\" viewBox=\"0 0 24 24\" stroke=\"currentColor\">\n                <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M17 8h2a2 2 0 012 2v6a2 2 0 01-2 2h-2v4l-4-4H9a1.994 1.994 0 01-1.414-.586m0 0L11 14h4a2 2 0 002-2V6a2 2 0 00-2-2H5a2 2 0 00-2 2v6a2 2 0 002 2h2v4l.586-.586z\" \/>\n            <\/svg>\n\n            <span x-ref=\"comment_count\" class=\"disqus-comment-count text-slate text-opacity-80\" data-disqus-identifier=\"112697\">\n\t\t\t\t\t\t\t<\/span>\n        <\/span>\n\t    <\/footer>\n<\/article><!-- #post-112697 -->        <\/div>\n      <\/div>\n    <\/div>\n  <\/div>\n\n  ","protected":false},"excerpt":{"rendered":"<p>A 1031 exchange is one of the smart real estate investor&#8217;s best strategies. But what is it\u2014and when is it the best choice?<\/p>\n","protected":false},"author":676,"featured_media":137236,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7359,7119],"tags":[209,5195,7221,5975],"class_list":["post-134564","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-1031-exchanges","category-biggerpockets-daily","tag-business","tag-business-management","tag-business-comm","tag-taxes"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/134564","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/676"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=134564"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/134564\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/137236"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=134564"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=134564"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=134564"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}