02/04/2025
"You Have to Exchange for the Exact Same Type of Property"
Reality: The term “like-kind” is broader than most people think. You can exchange a rental house for an apartment complex, raw land for a commercial building, or even an industrial property for a retail space. As long as the properties are for investment or business purposes, they qualify.
"1031 Exchanges Are Only for Big Investors"
Reality: Investors of all sizes can benefit. Whether you’re exchanging a small rental property or a large commercial asset, a 1031 exchange helps defer capital gains taxes and build long-term wealth.
"You Have Unlimited Time to Complete the Exchange"
Reality: Strict deadlines apply. You have 45 days to identify replacement properties and 180 days to close on the new property after selling the original one. Missing these deadlines means losing the tax deferral benefit.
"Primary Residences Qualify for a 1031 Exchange"
Reality: 1031 exchanges are for investment or business properties only, not personal residences. However, if you convert a personal home into a rental property and hold it for investment purposes, it may become eligible.
"Debt Doesn’t Matter in a 1031 Exchange"
Reality: To fully defer capital gains taxes, the replacement property must be of equal or greater value, and any debt paid off in the sale must be replaced in the new purchase—either through new debt or additional cash investment.