Sell Commercial Property Without Paying Capital Gains Tax Now? How a 1031 Exchange Works
Note sull'episodio
Thinking about selling a commercial property with a large gain? Before you sell, you need to understand the 1031 Exchange.
A properly structured 1031 exchange can allow a commercial real estate investor to defer capital gains taxes by reinvesting the proceeds from one investment property into another qualifying like-kind property—keeping more equity working in the next deal. But the rules are strict, the deadlines are unforgiving, and one procedural mistake can cause the exchange to fail. In Episode 9 of Zoned Commercial, I break down the 1031 Exchange from beginning to end—in practical, plain English. I am Roy Malkison — licensed realtor, loan officer, insurance agent, and business broker. Founder of Malkison Company.
In this episode we cover:
— What a 1031 Exchange actually is and how tax deferral works
— The critical 45-day identification deadline
— The 180-day closing deadline and why both clocks run at the same time
— The Three-Property Rule, 200% Rule, and 95% Rule
— What qualifies as like-kind property
— How you can exchange one type of commercial property for another
— Why you need a Qualified Intermediary (QI) and why you should never touch the sale proceeds
— What cash boot and mortgage boot are and how they can trigger taxes
— How a Reverse 1031 Exchange works
— How Delaware Statutory Trusts (DSTs) can be used in a 1031 strategy
— The five costly 1031 mistakes that can turn a tax-deferred transaction into an unexpected tax bill.
The biggest takeaway: A 1031 Exchange is not simply about “avoiding taxes.” It is a strategy for deferring taxes and keeping more of your equity invested as you move from one commercial real estate investment to the next. ⚠️ IMPORTANT DISCLAIMER I am not a tax attorney or CPA. This episode is for educational purposes only. Every 1031 exchange should be structured with a qualified intermediary and reviewed with a qualified CPA and commercial real estate attorney.
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