Question 1

What is a 1031 exchange?

Accepted Answer

A 1031 exchange — named after Section 1031 of the IRS code — allows real estate investors to defer capital gains tax when selling an investment property by reinvesting the proceeds into a like-kind property. Strict timelines and structural rules apply, and a qualified intermediary is required to facilitate the transaction.

Question 2

Can I exchange a single-family rental into an apartment building?

Accepted Answer

Yes. Like-kind in a 1031 context is interpreted broadly — virtually any U.S. investment real estate qualifies. Single-family rentals, condos, duplexes, and small income properties can be exchanged into multifamily, commercial, or fractional/DST interests when properly structured.

Question 3

What if I no longer want tenant headaches?

Accepted Answer

Exchanging into a Delaware Statutory Trust (DST) or other professionally managed passive investment can move you out of day-to-day operations entirely while preserving the tax-deferral benefits of the exchange. Many Orange County owners use this strategy as they approach or enter retirement.

Question 4

What is a Delaware Statutory Trust (DST)?

Accepted Answer

A DST is a legal structure that allows multiple investors to hold fractional interests in institutional-quality real estate. The IRS recognizes DST interests as qualifying replacement property for 1031 exchanges. Investors typically receive monthly distributions and have no operational responsibility. DSTs are illiquid and carry investment risk; they should be considered with a financial advisor.

Question 5

How long do I have to complete an exchange?

Accepted Answer

From the close of your relinquished property, you have 45 days to identify replacement property in writing and 180 days total to complete the acquisition. These timelines are strict and do not pause for weekends, holidays, or extenuating circumstances. Preparation before listing is critical.

Question 6

What are the risks?

Accepted Answer

All real estate investment carries risk — including market, liquidity, financing, and management risk. DSTs and fractional interests are particularly illiquid and depend on sponsor performance. 1031 exchange rules are strict and missteps can disqualify the entire transaction. This site is educational; always consult your CPA, tax attorney, and a qualified intermediary.

Question 7

Do I need a CPA or attorney involved?

Accepted Answer

Yes. Mark works alongside your CPA and tax attorney — not in place of them. He facilitates the real estate strategy and connects you with qualified intermediaries; tax and legal counsel structure the specifics for your situation.

Clear answers to the questions thoughtful owners ask.

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