1031 EXCHANGES
What is 1031 Exchange?
A 1031 Exchange is a tax-deferred real estate transaction that allows investors to sell an investment property and reinvest the proceeds into other like-kind property—without paying taxes at the time of sale. Taxes that may be deferred include federal capital gains tax, state income tax, net investment income tax, and depreciation recapture. Named after Section 1031 of the Internal Revenue Code and part of the U.S. tax code for over a century, this strategy is commonly used by real estate investors to defer taxes, preserve equity, and build wealth over time.
To qualify, both the relinquished and replacement properties must be held for investment or for productive use in a trade or business. One key requirement is the “same taxpayer” rule, meaning the taxpayer who sells the relinquished property must be the same taxpayer who acquires the replacement property—ensuring continuity of ownership for tax purposes. The process also involves strict IRS timelines: the replacement property must be identified within 45 days of the sale, and the acquisition must be completed within 180 days of the sale. A Qualified Intermediary (QI) is required to facilitate the exchange and ensure full compliance with IRS regulations.
In addition to the standard "delayed" exchange, investors may consider advanced strategies such as reverse exchanges, where the replacement property is acquired before the relinquished property is sold, and improvement (or build-to-suit) exchanges, where exchange funds are used to construct or improve the replacement property during the exchange period. These structures offer greater flexibility for investors with complex needs or timing constraints.
1031 Exchanges are powerful tools for investors seeking to upgrade properties, diversify by asset type or location, reduce management responsibilities, or transition into management-free real estate investments such as Triple-Net (NNN) leased properties or Delaware Statutory Trusts (DSTs)—all while deferring taxes and optimizing long-term returns.
Since there is no limit to the number of 1031 Exchanges an investor can complete, they can be strategically used as part of a comprehensive estate planning strategy. Upon the investor’s death, any deferred taxes may be eliminated through a stepped-up basis, allowing heirs to inherit the property at its fair market value—without incurring capital gains taxes or depreciation recapture.
How we can help
R. J. GULLO 1031 SERVICES, LLC is a qualified intermediary company with a proven track record of facilitating successful 1031 Exchanges throughout the United States. Backed by decades of specialized experience, we provide the essential services and expert guidance clients rely on to complete exchanges efficiently and in accordance with IRS requirements. Our role includes holding sale proceeds, preparing all necessary documentation, coordinating the logistics of the exchange, and transferring funds. Led by a highly knowledgeable management team, we help clients navigate even the most complex transactions with clarity and confidence. Whether you’re exchanging into a traditional, actively managed property or opting for a management-free solution—such as a Triple-Net (NNN) lease investment or Delaware Statutory Trust (DST)—we deliver clear, responsive, and dependable service every step of the way. Our mission is to preserve your tax-deferred status while making the exchange process seamless and worry-free.
Disclaimer: R. J. GULLO REAL ESTATE SERVICES, LLC, and Anthony J. Gullo, in his capacity as a Direct Participation Programs Representative, along with their related parties, do not provide brokerage services to clients of R. J. GULLO 1031 SERVICES, LLC.