Key Takeaways

• Plan the exchange before the relinquished property closes.
• Treat the 45-day identification and 180-day completion periods as hard deadlines.
• Use an independent qualified intermediary and keep exchange proceeds outside the taxpayer’s control.
• Evaluate fund security, documentation, and wire controls—not only transaction fees.
• Coordinate tax and legal questions with the investor’s own professional advisors.

Planning Considerations

commission is tied to the transaction price. What if you could help your

clients afford a more valuable property? When an investor sells, capital

gains taxes can take a huge bite out of their buying power. A 1031

exchange changes that. It allows them to reinvest their pre-tax sale

proceeds, meaning they have more capital to purchase a bigger or better

replacement property. For you, a higher purchase price translates

directly into a larger commission. This is how you can strategically

grow your income, and the path starts when you become a 1031 exchange

referral agent.

Key Takeaways

– Act as the Strategic Connector: Your main job is to spot the

potential for a 1031 exchange and then introduce your client to a

Qualified Intermediary. Your value comes from making this crucial

connection, not from offering tax or legal advice.

– Manage the Critical Deadlines: A successful exchange relies on

meeting firm deadlines. Help your clients by managing the 45-day

identification window and the 180-day closing period, ensuring the

process stays on schedule from start to finish.

– Grow Your Income and Influence: Offering 1031 exchange referrals can

lead to larger commissions and builds deep client loyalty. This

expertise also strengthens your professional network, positioning

you as a go-to resource for other professionals like CPAs and

attorneys.

What Is a 1031 Exchange?

Before you can guide clients, you need a solid grasp of what a 1031

exchange is. At its core, it’s a powerful strategy found in Section

1031 of the U.S. Internal Revenue Code. It allows real estate

investors to sell an investment property and purchase a new one

while deferring capital gains taxes. Think of it as a way to keep

your investment money working for you, helping you build wealth

without an immediate tax hit. Let’s break down the key components

you need to know.

The main reason your clients will be interested in a 1031 exchange

is the ability to defer capital gains tax. When an investor sells a

property that has appreciated in value, they typically owe taxes on

the profit. A 1031 exchange allows them to postpone paying those

taxes by reinvesting the proceeds into a new, similar property. This

means they can use the full amount of their sale proceeds to acquire

a larger or more valuable property, effectively growing their

portfolio at a faster rate. It’s important to remember that the tax

is deferred, not forgiven. It will eventually be due when the

replacement property is sold, unless another exchange is initiated.

The term "like-kind" can be a little confusing, but for real estate,

it’s surprisingly broad. According to the IRS, a like-kind exchange

involves properties of the same nature or character, even if they

differ in grade or quality. This means your client can exchange an

apartment building for raw land, a rental house for a commercial

office, or a duplex for a retail space. The key is that both the

property being sold and the property being acquired must be held for

productive use in a trade, business, or for investment. A personal

residence, like a primary home or a vacation house used mostly for

personal enjoyment, doesn't qualify.

Decoding the Deadlines and Tax Rules

This is where things get serious. A 1031 exchange comes with strict,

non-negotiable deadlines that are critical to its success. After the

sale of the original property closes, the investor has exactly 45

days to formally identify potential replacement properties, Then,

they have a total of 180 days from the original sale date to close

on the purchase of one or more of those identified properties. These

two periods run at the same time. Successfully complying with the

IRS-imposed deadlines is one of the biggest hurdles, which is why

working with an expert Qualified Intermediary is so important. They

ensure every step is documented correctly and completed on time.

Why Become a 1031 Exchange Referral Agent?

If you work with real estate investors, you’ve probably heard them

talk about capital gains taxes. Becoming a 1031 exchange referral

agent lets you offer a powerful solution to that problem. It’s more

than just another service; it’s a way to deepen client

relationships, increase your earnings, and establish yourself as a

true expert in your field. By understanding the 1031 exchange

process, you can guide clients toward significant tax savings and

open up new opportunities for your own business. Let's look at the

three biggest benefits.

Grow Your Income Through Referrals

Let's be direct: helping your clients with a 1031 exchange can

significantly increase your income. When an investor sells a

property, they face a hefty capital gains tax bill. A 1031 exchange

allows them to defer those taxes, freeing up their entire sale

proceeds for reinvestment. This means your client has more buying

power. Instead of being limited by post-tax dollars, they can use

their pre-tax funds to acquire a more valuable replacement property.

For you as an agent, a higher purchase price translates directly

into a larger commission. It’s a clear win for everyone involved.

Your client gets to leverage their investment, and you earn more

from the transaction.

Add Value for Your Clients and Your Career

Knowing the ins and outs of 1031 exchanges makes you more than just

a real estate professional; it makes you a strategic partner. When

you can identify a 1031 opportunity for a client, you’re providing

value that goes far beyond a single transaction. You’re helping them

build wealth and achieve their long-term investment goals. This

level of service builds incredible trust and loyalty, turning

one-time clients into lifelong partners who send referrals your way.

This expertise also sets you apart in a crowded market. You become

the go-to resource for complex investment scenarios, which

strengthens your professional reputation and career.

Expand Your Professional Network

Specializing in 1031 exchanges plugs you into a valuable ecosystem

of professionals. These transactions are a team sport, requiring

collaboration between real estate agents, CPAs, attorneys, and

Qualified Intermediaries (QIs). By becoming one of our referral

partners, you position yourself at the center of this network. Other

professionals, like lawyers and accountants, will seek you out to

help their clients find replacement properties. In turn, you can

confidently connect your clients with trusted experts. Building

these relationships creates a powerful referral loop that supports

everyone’s business.

What Does a 1031 Exchange Referral Agent Do?

As a 1031 exchange referral agent, you act as a connector and a

guide. Your primary function isn't to be the expert on every tax

code nuance, but to identify when a client could benefit from a 1031

exchange and connect them with the professionals who can make it

happen. You are the first point of contact, helping your clients see

a path to growing their real estate portfolio more efficiently. By

spotting these opportunities, you add immense value to your services

and become an indispensable resource for your clients.

Your Role in the Process

Your main job is to recognize the potential for a 1031 exchange.

When you see a client planning to sell an investment or business

property, that’s your cue. You can introduce them to the core

concept: a 1031 exchange lets them sell that property and reinvest

the proceeds into a new, similar one, all while deferring capital

gains taxes. You don't need to know every detail, just enough to

explain the benefits and get the conversation started. By flagging

this opportunity, you’re opening the door for your client to explore

a powerful financial strategy that can significantly impact their

investment goals.

Setting Boundaries: What's Not Your Job

Knowing what you don't do is just as important as knowing what you

do. You are not a tax advisor or a legal expert, and you should

never give tax or legal advice. Your responsibility is to identify

the opportunity and then refer your client to the right specialists.

Trying to interpret complex IRS rules yourself can create risk for

both you and your client. The most helpful thing you can do is say,

"This seems like a great situation for a 1031 exchange. Let's

connect you with a Qualified Intermediary who can walk you through

the specifics." This protects everyone and ensures your client gets

accurate, professional guidance.

Collaborating with Tax, Legal, and QI Experts

A successful 1031 exchange is a team effort, and you play a key role

in helping your client assemble their team. The most important

player you'll introduce is the Qualified Intermediary (QI). A QI is

a neutral third party required by the IRS to facilitate the

exchange. They hold the funds from the sale and ensure all deadlines

and rules are met. When you recommend a QI, you should look for a

company with a strong reputation, deep experience, and transparent

fees. Partnering with a trusted QI like Aspen Exchange ensures your

client's transaction is secure, compliant, and smooth from start to

finish.

Do You Need Special Qualifications?

You might be wondering if you need a special license or

certification to become a 1031 exchange referral agent. The short

answer is no. You don’t need to go back to school or pass a new

exam. Your existing expertise as a real estate professional, broker,

or financial advisor is the perfect foundation. The key is to build

upon what you already know and understand the specific role you play

in the exchange process.

Becoming a successful referral agent isn’t about becoming a tax

expert overnight. It’s about being able to identify when a client

could benefit from a 1031 exchange and connecting them with a

specialist who can handle the technical details. Your value comes

from your client relationships and your understanding of the real

estate market. By adding 1031 exchange knowledge to your toolkit,

you position yourself as an indispensable resource, creating more

opportunities for your clients and your own business. Think of it as

adding a new, powerful service that complements the work you already

do.

Leverage the Real Estate Knowledge You Already Have

As a real estate professional, you’re already in the perfect

position to identify clients who could benefit from a 1031 exchange.

You understand property values, market trends, and the financial

goals of your clients. Leveraging this knowledge is your first step.

When a client mentions selling an investment property, your ears

should perk up. This is your cue to ask if they’ve considered a

strategy to defer their capital gains taxes.

You don’t need to know every nuance of the tax code, but having a

solid grasp of the basics will set you apart. Knowing the

fundamental rules, like the 45-day identification period and the

180-day closing period, makes you a credible source of information.

You can deepen your understanding of these concepts, which helps you

educate your clients and guide them toward making a smart financial

decision.

Skills That Make You Stand Out

Beyond your real estate knowledge, a few key skills will make you an

exceptional referral agent. Strong communication and organizational

abilities are at the top of the list. You’ll be a key player in

keeping the process on track, which means clearly explaining the

next steps to your client and coordinating with their Qualified

Intermediary (QI). Remember, a client completing an exchange must

purchase a replacement property, which is where you shine.

A proactive mindset is also critical. Since your client can reinvest

their entire sale proceeds without a major tax hit, they have

significant buying power. Helping them find a suitable replacement

property within the tight 45-day window is a huge value-add. By

building these skills, you not only serve your clients better but

also strengthen your professional reputation, making the idea of

becoming a referral partner a natural fit for your business growth.

What You Don't Need (and What to Avoid)

Just as important as knowing what to do is knowing what not to do.

First and foremost, you are not the Qualified Intermediary.

Attempting to act as one or using a disqualified party (like the

client’s agent, attorney, or accountant) can void the entire

exchange. Your role is to refer, not to facilitate the exchange

itself. You also don’t need to be a tax advisor. Always direct

clients to their CPA or tax professional for specific tax advice.

It’s also wise to be cautious about how you handle referral fees.

Before accepting any compensation, check with your managing broker

to ensure you’re following all state and local regulations to avoid

fines or risking your license. The best approach is to maintain

clear boundaries. Focus on what you do best: serving your client’s

real estate needs and knowing when to connect with a QI to handle

the rest.

Become a Referral Partner with Aspen Exchange

Partnering with a qualified intermediary you trust is key to helping

your clients succeed, and it’s a great way to strengthen your own

professional offerings. At Aspen Exchange, we see our referral

partners as an extension of our team. We’re committed to providing

you and your clients with personalized service and expert support.

Here’s how you can join our network and what you can expect when you

do.

The first step is the easiest. You can sign up for our referral

program directly on our website. A significant portion of our

exchanges come from trusted professionals like realtors, lawyers,

and CPAs, because they know their clients are in good hands with us.

By joining, you’re becoming part of a network dedicated to

excellence and client success. We make the process straightforward,

so you can quickly get started on providing this valuable service to

your clients and growing your business through a new income stream.

Step 2: Know What to Expect Next

Once you’re a partner, we’ll help you get familiar with the exchange

process from a referral perspective. The most critical part of any

1031 exchange is meeting the strict IRS deadlines, including the

45-day identification period and the 180-day exchange period. We’ll

help you understand these timelines so you can set clear

expectations for your clients from the start. Our system includes

automated deadline reminders and accurate documentation to keep

every transaction on track. You can explore our extensive insights

to learn more about these rules.

Step 3: Access Your Partner Tools and Resources

We don’t expect you to be a 1031 exchange expert overnight. That’s

our job. As an Aspen Exchange partner, you get access to resources

designed to help you guide your clients with confidence. We provide

educational materials that break down complex topics into simple,

actionable information. Most importantly, you have a direct line to

our team of specialists. If you or your client have a question, you

can always contact our dedicated team for clear answers and

personalized support through every stage of the exchange.

How to Guide Your Clients Through a 1031 Exchange

As a referral agent, your role is to be a trusted guide. You don't

need to be the expert on every tax code nuance, but you do need to

know the map. Guiding your client through a 1031 exchange involves

spotting the opportunity, connecting them with the right experts,

and helping them stay on top of critical deadlines. Think of

yourself as the project manager who keeps the train on the tracks.

By understanding these five key steps, you can confidently lead your

clients toward a successful, tax-deferred transaction and solidify

your value as their go-to real estate professional.

The best time to talk about a 1031 exchange is before your client

even lists their property. Keep your ears open for key phrases. Are

they talking about selling a rental property? Do they mention

wanting to buy a different investment property soon after? Are they

worried about the tax hit from a sale? These are all signals that a

1031 exchange could be a perfect fit. By identifying the opportunity

early, you can introduce the idea as a strategic part of their

investment plan, not a last-minute scramble. This proactive approach

shows your value and helps your client make the most of their

assets. You can find more helpful articles on our Insights page to

share with them.

Step 2: Introduce Your Client to a Qualified Intermediary

Once your client is interested in an exchange, your next and most

important move is to connect them with a Qualified Intermediary

(QI). A QI is a neutral third party that the IRS requires for a

valid 1031 exchange. They are not an optional part of the process.

The QI’s job is to hold the proceeds from the sale of the old

property and use them to acquire the new one, ensuring your client

never takes constructive receipt of the funds. This is a critical

step for compliance. Making a warm introduction to a trusted QI like

Aspen Exchange is one of the most valuable services you can provide.

You can have your client contact us directly to get started.

The clock starts ticking the moment your client’s property sale

closes. From that date, they have exactly 45 calendar days to

formally identify potential replacement properties in writing. This

is a firm, non-negotiable deadline. There are no extensions for

weekends, holidays, or any other reason. Your client can identify up

to three properties of any value or more under different rules, but

the identification must be specific and submitted to their QI. Your

role here is to gently but consistently remind them of this deadline

and help them focus their search so they can make a confident and

timely decision. This is often the most stressful part of the

exchange, so your support is crucial.

Step 4: Close on the New Property in 180 Days

After the 45-day identification period comes the second major

deadline: the closing. Your client must close on one or more of the

properties they identified within 180 days of the original

property's sale date. It’s important to note this is a total of 180

days, not 180 days after the 45-day mark. This timeline gives them

135 additional days to finalize financing, complete due diligence,

and close the deal. As their agent, you can help them stay on track

by coordinating with lenders, inspectors, and the title company to

ensure a smooth closing process that meets the deadline. Keeping

everything moving forward is key to a successful exchange.

The final step is to ensure all the paperwork is in order for tax

reporting. While your client’s tax advisor will handle the filing,

the QI is responsible for providing the necessary documentation that

proves a valid exchange took place. This is why working with an

experienced QI is so important. They ensure every step, from the

initial agreement to the final closing statement, is meticulously

documented to meet IRS requirements. By connecting your client with

a reliable QI, you help protect them from compliance issues down the

road. This final step completes the process and solidifies your role

as a valuable partner in their investment journey. Consider becoming

one of our referral partners to formalize the relationship.

How to Work with a Qualified Intermediary

Once you connect your client with a Qualified Intermediary (QI),

your role evolves into a collaborative partnership. This

relationship is the backbone of a successful 1031 exchange.

Understanding how to work together effectively is not just good

practice; it’s essential for your client’s success and your

reputation as a trusted referral agent. Think of the QI as your

co-pilot for the technical parts of the journey, allowing you to

focus on what you do best: guiding your client through the real

estate transaction.

Your Role vs. the QI's Role

Think of the division of labor as clear and distinct. Your primary

role is to help your client with the real estate itself, from

selling the relinquished property to identifying and acquiring the

replacement property. You are their guide on the ground. The

Qualified Intermediary, on the other hand, is a mandatory and

independent third party that manages the exchange process. The QI

prepares the necessary exchange documents, holds the sale proceeds

in a secure account, and ensures the transaction adheres to strict

IRS timelines and rules, You, your client, or their direct agents

cannot act as the QI, which is why your referral is so important.

Choosing the right QI is one of the most critical decisions in the

entire 1031 exchange process. A simple mistake, like using a

disqualified person or failing to use a QI at all, can invalidate

the entire exchange. This would leave your client with an unexpected

and significant capital gains tax bill. A professional and

experienced QI does more than just hold funds; they provide security

and ensure every detail is compliant. When you refer your client to

a reputable accommodator, you are protecting their investment and

offering them the expert guidance needed to complete their exchange

with confidence.

How to Build a Great Relationship with Your QI

A strong partnership with a QI is built on trust and communication.

When vetting a QI for your clients, look for a team with extensive

experience, a stellar reputation, and transparent fees. Ask how they

secure exchange funds and if they have expertise in complex

transactions. Once you build a great relationship with a QI like

Aspen Exchange, keep the lines of communication open. Proactively

update them on transaction progress and be responsive to their

requests. This collaborative approach ensures everyone is aligned,

deadlines are met, and your client experiences a smooth, stress-free

exchange from start to finish.

What Challenges Should You Prepare For?

Becoming a trusted resource for 1031 exchanges is a fantastic way to

add value for your clients and grow your business. But let's be

honest, anything involving the IRS and tight deadlines comes with

its own set of hurdles. Seeing these challenges on the horizon is

the best way to prepare yourself and guide your clients to a smooth,

successful closing. Think of it this way: the agents who can

confidently handle these issues are the ones who stand out.

The stakes in a 1031 exchange are high. Your client is counting on

this process to defer significant capital gains taxes, allowing them

to reinvest their full proceeds into a new property. A single

misstep can jeopardize the entire exchange. But don't let that

intimidate you. By understanding the common pitfalls ahead of time,

you can create a clear roadmap for your clients, manage their

expectations, and solidify your role as an indispensable part of

their investment journey. Let's walk through the main challenges

you'll face and how you can turn them into opportunities to shine.

Juggling Deadlines and Client Expectations

One of the most intense parts of any 1031 exchange is the ticking

clock. The IRS gives your client a 45-day period to identify

potential replacement properties and a total of 180 days to close on

a new one. These deadlines are absolute and strictly enforced, with

no extensions for weekends, holidays, or market conditions. A huge

part of your role is to be a calm, organized project manager. You'll

need to help your client understand this urgency from day one,

ensuring they are actively searching for properties before their

45-day window even begins. Managing their stress while keeping the

transaction on track is a delicate balance, but it's where a great

agent truly proves their worth.

Clearing Up Common 1031 Misconceptions

You will quickly learn that many investors have heard of 1031

exchanges but have fuzzy ideas about how they actually work. Be

prepared to do some myth-busting. A frequent misconception is that a

client's attorney or friend can hold the exchange funds, but the IRS

requires the use of a Qualified Intermediary (QI). It's your job to

explain why these rules exist and to connect your client with a

professional QI. It's also critical to know your limits. Offering

tax or legal advice is a serious risk that could jeopardize your

license. Your role is to be a knowledgeable connector, not the final

word on tax law.

Keeping Up with Tax Laws and IRS Rules

Tax laws aren't set in stone, and the regulations for 1031 exchanges

can be intricate. While you aren't expected to be a tax attorney,

having a strong foundational knowledge is essential for spotting

opportunities and protecting your clients. You should be comfortable

explaining what "like-kind" property means (for instance, that it

now only applies to real estate) and the basic mechanics of the

exchange process. Staying informed about potential legislative

changes is also part of the job. Following reputable industry

sources and the insights from your QI partner will help you stay

current and provide accurate, high-level information to your

clients.

Knowing When to Lean on Your Professional Network

No one can be an expert in everything, and you shouldn't try to be.

A successful 1031 exchange is a team sport, and the most effective

referral agents are those who build a strong team. Your greatest

asset is your professional network. The real skill is knowing when

to pass the baton to a CPA for tax advice, a real estate attorney

for legal questions, or a QI for exchange execution. When you become

a referral partner, you create a seamless experience for your

client. This collaborative approach not only leads to better

outcomes but also builds deep, lasting trust with everyone involved.

How to Build Your 1031 Exchange Referral Business

Building a referral business around 1031 exchanges is about more

than just passing along a name. It’s about creating a new, valuable

part of your professional identity. By positioning yourself as a

knowledgeable guide, you can create a steady stream of high-quality

referrals that benefit your clients and your bottom line. This isn't

about a hard sell; it's about being a helpful resource that people

remember and trust. Let's walk through the key strategies to make

that happen.

Educate Your Current Clients

Your existing client base is the perfect place to start. When you

help them understand the power of a 1031 exchange, you’re not just

providing a service, you’re building trust. Think of it this way:

knowledge of tax-deferred exchanges can help your clients build

wealth, and it helps you become an indispensable part of their

investment journey. Start by explaining the basics in simple terms,

sharing valuable resources, and showing them how an exchange could

fit into their long-term goals. When they see you as an educator,

they’re more likely to turn to you when the time is right.

Become the Go-To 1031 Resource

Make it a habit to talk about 1031 exchanges with everyone you work

with in a real estate transaction, not just your direct client. You

never know who might be listening. The seller of your client’s new

property could be an investor, or their attorney might have other

clients who could benefit. As one expert puts it, "Investors

remember who told them about 1031 exchanges and will work with that

Real Estate Professional when the time is right to proceed." By

consistently being the person who brings up this powerful strategy,

you establish yourself as the go-to expert in your network, planting

seeds for future business.

Market Your Referral Services Effectively

Don’t be shy about letting other professionals know you’re focused

on 1031 exchange referrals, Lawyers, CPAs, and title professionals

are often the first to know when a client is selling an investment

property. Building relationships with them is key. In fact, at Aspen

Exchange, a significant portion of our exchanges come from these

professional referrals. This shows the immense trust and confidence

placed in knowledgeable partners. You can formalize these

relationships when you become one of our referral partners, which

adds credibility and gives you a clear process for working together.

Mention your 1031 expertise on your website, in your email

signature, and during networking events.

The world of real estate and tax law is always changing. A

commitment to ongoing education is non-negotiable if you want to

provide the best advice. Take the time to learn the finer points of

tax deferral strategies, due diligence, and investment analysis. The

more you know, the more confident you’ll feel guiding your clients

through the process. This dedication to growth not only benefits

your clients but also solidifies your reputation as a true

professional. Make it a priority to stay informed on the latest IRS

rulings and market trends so you can answer questions with accuracy

and confidence.

How much do I really need to know about the tax code to be a

referral agent? You don’t need to be a tax expert, and you should

never give tax advice. Your role is to have a strong foundational

understanding of the process. Know the key benefits, like tax

deferral, and the critical deadlines, like the 45-day identification

and 180-day closing periods. This knowledge allows you to spot an

opportunity for a client and explain the concept confidently. Your

main job is to connect them with the specialists, like a Qualified

Intermediary and their CPA, who will handle the technical tax and

legal details.

What is my role after I refer my client to a Qualified Intermediary

like Aspen Exchange? After you make the introduction, your role

shifts to collaboration. The Qualified Intermediary (QI) will manage

the exchange paperwork and the secure holding of funds, but you

remain the client's real estate guide. You will be instrumental in

helping them find and vet potential replacement properties within

the tight 45-day identification window. You will also manage the

purchase transaction itself, coordinating with lenders and title

companies to ensure a smooth closing before the 180-day deadline

expires.

What's the biggest mistake my client could make during a 1031

exchange? The most damaging mistakes often involve deadlines and

funds. Missing the 45-day identification deadline or the 180-day

closing deadline will instantly invalidate the exchange, triggering

a large tax bill. Another critical error is taking "constructive

receipt" of the sale proceeds, even for a moment. The funds must go

directly from the sale of the old property to the Qualified

Intermediary. This is why referring your client to a professional QI

from the very beginning is the most important step you can take.

When is the best time to suggest a 1031 exchange to a client? The

ideal time to bring it up is as early as possible, preferably before

they even list their investment property for sale. Listen for cues

that they are thinking about selling one asset to acquire another or

that they are concerned about the tax consequences of a sale.

Introducing the 1031 exchange as a proactive strategy allows them to

build it into their plan from the start, which reduces stress and

makes for a much smoother process.

How does referring a client for a 1031 exchange actually increase my

income? It helps your bottom line in a couple of key ways, First,

when your client uses a 1031 exchange, they can reinvest the entire

pre-tax proceeds from their sale. This gives them significantly more

buying power to purchase a more valuable replacement property, which

directly translates into a larger commission for you, Second, by

providing this strategic guidance, you build incredible client

loyalty, leading to repeat business and valuable referrals to other

investors in their network.

Frequently Asked Questions

What is the most important rule for a 1031 exchange referral agent?

The answer depends on the topic, but investors should begin with eligibility, independent QI engagement before closing, control of proceeds, the 45-day identification period, the 180-day completion period, and transaction-specific advice from tax and legal professionals.

Can an investor receive the sale proceeds and deposit them with a QI later?

That can jeopardize a deferred exchange because actual or constructive receipt of proceeds is a central issue. The exchange should be structured with the qualified intermediary before the relinquished property closes.

Does a 1031 exchange eliminate capital gains tax?

A qualifying exchange generally defers recognition of gain rather than permanently eliminating tax. Future sales, additional exchanges, estate-planning rules, basis, and other facts can change the ultimate tax result.

What form reports a 1031 exchange to the IRS?

Taxpayers generally report a like-kind exchange on Form 8824. A tax professional should prepare or review the filing and determine the transaction-specific tax treatment.