A 1031 exchange lets you sell an investment property and put off paying capital gains tax, as long as you buy another investment property and follow strict IRS rules. The rules aren’t hard to understand. They’re just easy to break, and one slip can turn a tax-free swap into a big tax bill.

Most failed exchanges go wrong before the first property even sells.

What a 1031 Exchange Is, in Plain Words

Section 1031 of the tax code says you don’t owe tax right away when you trade one piece of business or investment real estate for another “like-kind” property. You still owe the tax someday. You’re just moving it forward, often for many years.

“Like-kind” is broader than it sounds. A rental house can be swapped for a small office building, or raw land for a strip of retail units. What doesn’t qualify: your own home, property you bought to flip, and since 2018, anything that isn’t real estate.

Say an investor sells a Jacksonville Beach rental she bought years ago. If she buys an Orange Park duplex through a proper exchange, she carries that gain into the new property instead of paying tax on it this year.

The Deadlines That Make or Break a 1031 Exchange

The IRS gives you two clocks, and both start the day your old property closes.

Deadline	What you must do	Example if you sell on March 1
Day 45	Name your possible replacement properties in writing	April 15
Day 180	Close on the new property	August 28

Weekends and holidays don’t pause these clocks. There’s also a catch for late-year sales. You must finish by day 180 or your tax return due date, whichever comes first. If you sell in November, you’ll likely need to file an extension to get the full 180 days.

Why Hiring the Best CPA for Real Estate 1031 Exchange Planning Starts Before You Sell

Once the sale closes, your choices narrow fast. A CPA can help you before that point by answering questions like these:

• How much gain and depreciation recapture are you really deferring?
• Do you need to buy a property of equal or greater value and debt to defer all of it?
• Would a partial exchange, where you take some cash and pay some tax, fit your plans better?
• Is the property held in the right name? The same taxpayer that sells generally has to buy.

At Tilbrook CPAs, we like to see the numbers when you’re still thinking about listing. That gives us room to plan the purchase side, line up a qualified intermediary, and avoid surprises at tax time.

Common Mistakes the Best CPA for Real Estate 1031 Exchange Planning Will Catch

Touching the money. The sale proceeds must go to a qualified intermediary, not to you. If the funds land in your bank account, even for a day, the exchange usually fails.

Taking “boot” without knowing it. Cash you keep, or a smaller mortgage on the new property, can be taxable. People often find this out only when the return is prepared.

Naming properties loosely. Your day-45 list must clearly describe each property. Most investors use the three-property rule, which lets you name up to three options of any value.

Forgetting the reporting. The exchange goes on Form 8824 with your tax return. The team at Tilbrook CPAs prepares that form and keeps a clean record of the new property’s tax basis, which matters when you sell again.

How to Choose the Best CPA for Real Estate 1031 Exchange Planning

Look for someone who works with investors every week, not once a year. Ask how many exchanges they’ve handled and how they track basis over several swaps. At Tilbrook CPAs, those are questions we expect.

Florida investors have one small advantage: there’s no state personal income tax, so the planning centers on federal tax. That keeps things simpler, but it doesn’t make the federal rules any less strict. Tilbrook CPAs works with property owners in Jacksonville, St. Augustine, Ponte Vedra, and Fernandina Beach. You can see how we approach these deals on our 1031 exchange planning page.

Quick Answers

Can I do a 1031 exchange on my house?

No. Your main home doesn’t qualify, though a separate rule may exclude part of the gain.

Can I hold the cash while I shop for the next property?

No. A qualified intermediary must hold it. If you’re unsure, ask Tilbrook CPAs before you sign closing papers.

The Takeaway

A 1031 exchange can protect years of growth. Plan early, keep your hands off the sale money, and bring your CPA in before the listing goes live.