1031 Exchange – Tax-Deferred Like-Kind Real Estate

Keep More of What You’ve Earned—Defer Taxes with a 1031 Exchange

A 1031 exchange allows investors to defer capital gains tax by reinvesting proceeds from the sale of one investment property into another of equal or greater value. At 1031 Financial, we help clients across New York City—from the Upper West Side to Long Island—and throughout the U.S. use this powerful strategy to preserve equity and build long-term wealth. Whether you're transitioning out of a Brooklyn brownstone or diversifying a commercial portfolio in Queens, our team makes the process seamless.

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Like-Kind Doesn’t Mean Like-for-Exactly-Like

The IRS defines a like-kind exchange as “a swap of real property held for productive use in a trade or business or for investment, for property of like kind.” In simpler terms, that means you can sell one type of investment real estate—say, a retail storefront in SoHo—and reinvest in another, like a multifamily building in Harlem or a Delaware Statutory Trust (DST) interest in commercial real estate. As long as both are held for investment purposes, they’re considered like-kind.

A Wide Range of Properties Qualify

The flexibility of the 1031 exchange makes it a valuable option for investors across the five boroughs and beyond. Qualifying like-kind property types include:


  • Apartment buildings and condos
  • Commercial properties and retail space
  • Vacant land or farmland
  • Industrial facilities or office buildings
  • Delaware Statutory Trusts (DSTs)
  • Single-tenant NNN properties
  • Self-storage, manufactured housing, and more



Whether you're trading up from a walk-up in Brooklyn or reinvesting into fractional DST ownership in a stabilized Class A asset, you have options.

Why Investors Choose 1031 Exchanges

Many of our clients in New York and nationwide use 1031 exchanges to:


  • Defer capital gains tax and depreciation recapture
  • Preserve equity by rolling full sale proceeds into new property
  • Grow their portfolio by acquiring larger or better-positioned assets
  • Eliminate management headaches through passive investments like DSTs
  • Diversify holdings across property types and locations
  • Increase cash flow with better-performing or stabilized replacements


By deferring tax, you gain access to more capital—capital that continues to work for you rather than being lost to the IRS.

The Core Rules You Need to Know

To complete a valid 1031 exchange, the IRS requires that:


  • You reinvest 100% of sale proceeds into like-kind property
  • The replacement property is of equal or greater value
  • Debt from the relinquished property is replaced or exceeded
  • You identify potential replacements within 45 days
  • You close on the replacement within 180 days
  • A Qualified Intermediary (QI) holds proceeds during the exchange

Missing any one of these steps may impact your ability to defer 100% of your tax, so working with a dedicated advisor is critical.

Timing Is Everything: Know Your 45/180 Day Windows

The IRS gives you 45 days from the date of sale to identify replacement property and 180 days to close. These deadlines run concurrently and are strict. No extensions for weekends, holidays, or indecision. That’s why many investors in high-demand markets like NYC include backup options or consider DST investments that are ready to close fast. For more details, read our 1031 Exchange Timeline & Rules blog.

Identification Rules to Keep You Compliant

You can’t just identify an unlimited number of properties. The IRS allows you to:


  • Name up to three properties of any value (3-Property Rule),
  • Identify any number of properties as long as their combined value doesn’t exceed 200% of the original sale (200% Rule), or
  • Acquire 95% of the value of everything you identify if you go above these thresholds (95% Rule).



We’ll help you choose the identification strategy that fits your goals and timeline.

Here’s How It Works, Start to Finish

The 1031 exchange process typically follows this path:


  1. Sell your investment property
  2. Close with a QI to avoid constructive receipt
  3. Identify replacement property within 45 days
  4. Perform due diligence and secure financing
  5. Close on the new property within 180 days
  6. Complete necessary IRS reporting (Form 8824)


Want to go deeper? See our full Step-by-Step Guide to the 1031 Exchange.

Quick Answers to Common Questions

No. Primary homes don't qualify, but a portion of a mixed-use property or rental unit may.

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Can I do a 1031 exchange on my primary residence?

Unfortunately, if you don’t identify in time, the exchange fails and taxes are due. However, DSTs often serve as a reliable backup option when time is tight. Explore our DST Investment page to learn more.

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What if I miss the 45-day identification deadline?

Start the Process with Confidence

From Midtown Manhattan to Westchester, investors trust 1031 Financial to handle every part of their exchange with care, speed, and attention to the details that matter most. If you're considering a sale, facing tight deadlines, or simply want to preserve more of your equity, our team is ready to help.