Frequently Asked Questions

Owners of real property held for business or investment (not personal use homes), including apartments, offices, raw land, or commercial buildings

Use this self-qualification checklist form to check your 1031 eligibility. Questions cover your current and replacement property use, investment intent, timeline, and qualified intermediary coordination.

The IRS has very specific rules governing the timeline of a 1031 tax-deferred exchange. You have 45 days from the close of your first transaction to identify – in writing – your replacement property or properties. You have a further 135 days from there (or 180 days total from the close of your first transaction) to close your second transaction and successfully complete your exchange. These deadlines are firm, regardless of whether the 45th or 180th day falls on a Saturday, Sunday or Holiday.

• Choose a Qualified Intermediary (QI) to hold sale proceeds

• Sell original property; proceeds go to QI

• Identify >1 replacement property within 45 days

• Close replacement property within 180 days

• QI transfers funds; file IRS Form 8824 with your tax return

A Qualified Intermediary is a non-biased third party that facilitates 1031 exchange transactions. IRS rules require a Qualified Intermediary to facilitate a 1031 exchange. Without one, you can’t qualify for a 1031 tax-deferred exchange. Your QI may not be your agent or fiduciary. If you do not have a Qualified Intermediary in place before the close of your first transaction, the opportunity to do a 1031 exchange is lost.

Primary residences (unless partially rented), properties held for immediate resale (“dealer properties”), stocks, bonds or partnership interests

Yes, if you rent them for at least 2 weeks per year and keep personal use under 2 weeks or 10% of rental period, and report the property as investment on taxes

“Boot” is any cash or non-like-kind property received during a 1031 Exchange — it triggers taxable gains

A 1033 Exchange lets you defer tax if your property was involuntarily converted (e.g. eminent domain, condemnation). You can reinvest proceeds in replacement property to avoid income recognition

A DST isn’t a type of 1031 exchange, rather it is a vehicle that exchange proceeds can be invested into. DSTs allow investors to exchange relinquished property into units of a trust holding qualifying real estate. Of the 1031 exchanges done today, DSTs are believed to represent approximately 10% of the volume – this share has been increasing over the past decade as investors that "own dirt" seek to transition from active real estate management to passive mailbox money.

A DST is a fractional ownership trust of professionally managed real estate. DST interests are “like-kind” under 1031 and accepted in 1033 cases as replacement property

• Fractional ownership without management duties

• Access to institutional-quality properties

• Uses non-recourse financing, no individual underwriting

• Fully qualified for tax deferral under 1031/1033

Once formed and funded, the DST trustee:

• Cannot accept new funds

• Cannot refinance loans or enter new debt

• Cannot reinvest sale proceeds

• Limited to normal maintenance

• Must distribute cash promptly

• No renegotiating leases

• Must follow trust rules — or convert to an LLC if needed

Yes — after a DST property cycle, you can exchange DST interest into a REIT via a 721 UPREIT structure