Frequently Asked Questions
1031 Exchange Program
Strategic Net Lease Advisors
Investment sales | 1031 Exchange platform | Landlord representation | Development & capital markets advisory
A 1031 exchange, also known as a like-kind exchange, is a tax-deferred strategy that allows investors to sell an investment property and reinvest the proceeds into another like-kind property, deferring capital gains taxes.
Like-kind properties refer to investment or business properties of similar nature or use, such as exchanging a commercial building for a triple net (NNN) property or a rental property for another income-generating property. The properties don’t have to be identical but must be held for investment purposes.
There are two main deadlines:
- Identification Period: You must identify potential replacement properties within 45 days of selling your original property.
- Exchange Period: The replacement property purchase must be completed within 180 days of the original property's sale.
No, the 1031 exchange program applies only to investment or business properties. Personal residences or properties used for personal enjoyment are not eligible.
Any portion of the proceeds not reinvested in a replacement property is considered taxable as capital gains. This is known as a “boot” and includes leftover cash or debt not replaced in the new property.
Yes, the 1031 exchange program allows investors to reinvest into multiple properties or switch asset classes (e.g., trading a single property for several NNN properties), helping diversify and manage risk in their portfolio.
A Qualified Intermediary is a neutral third party required to facilitate the exchange. They hold the proceeds from the sale of your property and ensure they are used to purchase the replacement property, ensuring compliance with IRS regulations.
Yes, there are risks, including tight deadlines, difficulty finding suitable replacement properties, and market fluctuations. Working with experienced advisors and representatives can help mitigate these risks and ensure a successful exchange.
