The main reason for conducting a 1031 exchange is to defer the payment of capital gains tax. Here is the specific text from section 1031 itself: In general, No gain or loss shall be recogn2. Considering that long-term capital gains taxes are either 15 or 20 percent, and short-term capital gains rates range from. (3) Rate varies by state. A taxable event triggers a tax liability calculation, which is the tax. (B) Under paragraph (b)(2)(ii) of this section, all liabilities assumed by U ($7000) are excess liabilities assumed. (2) Based on amount of depreciation taken during ownership of the property. A 1031 exchange addendum is used to add any clarifying language to a 1031 exchange. ”. There are two parts then to the sale: the $450,000 exchanged. To this day, many tax experts refer to Section 1031 transactions as “Starker exchanges. Calculate the Final Basis in the 1031 Exchange. Diversification and sizing. Cover Strategy. In order for a property to qualify as like-kind, they must hold it for investment or. 8 NIIT for a total of $9,690. Reverse exchanges were created in order to help. Adjusted basis of like-kind property surrendered. It is possible to have little or no equity or profit upon a sale and still owe capital gains taxes. I own a property outright that is 650k. Pros Of The 1031 Tax Deferred Exchange Rules #1 Using the 1031 tax deferred exchange rules is to defer the capital gains taxes. Using the previous example, assume the company owes $350 in brokerage fees besides the expense of the asset's basis of $2,500. Sec. When it comes to buying and selling real estate, timing is everything. Interchange Timelines and Rules 1031. The three primary 1031 exchange rules to follow are: Replacement property should be of equal or greater value to the one being sold. Both properties must be similar enough to qualify as "like-kind. At the heart of the 1031 exchange is the 1031 exchange timeline, which dictates how a 1031 exchange is performed. Choose a qualified intermediary to coordinate the exchange. 1031 Exchange rules state that any difference between the amount of net sales proceeds received and total. This exchange allows you to defer capital gains taxes by permitting funds from selling one investment property to be exchanged for another. -Fair market value of boot received. e. " Completing a 1031 exchange allows you to defer the capital gains tax liability from your sale, but oftentimes, investors want to set aside a portion of their sales proceeds to boost their liquidity. A 1031 exchange is for those who wish to sell one property (or group of properties) and “exchange” that asset for a “like-kind” property. The extensions permit eligible persons who began an IRC §1031 exchange between July 12, 2022 and January 8, 2023, to extend the 180-day exchange period to the later of October 16, 2023 or 120. You don't have a lot of extra cash laying around to advance for an earnest money deposit. com Section 1031 of the IRC defines a 1031 exchange as when you exchange real property used for business or held as an investment solely for another business or investment property that is the same. dollars, the country’s official currency. This is what I come up with when I simply plug in the numbers in the example. In Peabody Natural Resources Co . Exeter 1031 Exchange Services, LLC 402 West Broadway, Suite 400, San Diego, California 92101 Office: (619) 239 -3091 • Facsimile: (866) 393-8371 • Web site: Suppose you are a real estate investor. While you cannot enter into a tax-deferred section 1031 exchange directly with stocks, bonds, etc. A 1031 exchange – also known as a like-kind tax deferred exchange or Starker Exchange – is a process used by real estate investors around the country to defer the payment of capital gains tax. . 25. -The receipt of boot in a § 1031 likekind exchange cannot result in the recognition of loss. Boot is a portion of the sales proceeds you receive from a 1031 exchange that isn’t re-invested in a replacement property. 86 % during June 2015 to June 2019. ” All deadlines below start from the closing date of the relinquished property (the contract date does. In a 1031 exchange, the taxpayer who owns the relinquished property must be the same taxpayer who takes ownership of the replacement property. The purpose of a 1031 exchange is to encourage active reinvestment in the. The excess liabilities assumed of $7000 is allocated to the exchange group. Internal Revenue Code (IRC) Section 1031 states that any exchange of properties of similar use can be exempt from most taxes. In this article, we will delve into the step-by-step process. Jeff Peterson can be reached by telephone at (612) 643-1031 or toll free at (877) 373-1031. Take 400k to buy an investment property while taking advantage of the 250k tax exemption on capital gains for primary. Step 1: Disposing of the original assetThe Biden Administration has proposed limiting Section 1031 like-kind exchange deferral to a maximum of $500,000 (single taxpayer) / $1 million (married taxpayers) in the budget for FY2024. The boot refers to the difference in price if you use the 1031 exchange to buy a property worth less than the one you’re selling. They’re now selling it for $1 million. 1) You don't mind paying taxes. Still $200,000 can be deferred, i. ; The basis of the replacement property is $20,000 −. Your exchange agreement specifies only 90% of the rental proceeds are to be included in the exchange. PPMO formula for Price Adjustment use NRB index of labor, material and equipment or fuel. 2. Prices range from $450 to over $1,500 per 1031 exchange. Do know that 1031 exchanges aren’t just for investment real estate. She wants to do a 1031 exchange into a $325,000 condo. ”. Sec. Because any money you receive from selling a property is taxable, you technically can’t receive that money when you sell your property. While the owners must invest in the properties, very few other rules exist. Introduction to 1031 Exchange Calculation Formula. To qualify as a Section 1031 exchange, a deferred exchange must be distinguished from. The property owner has 45 days from selling their investment property to identify one or more like-kind properties they. type of Section 1031 exchange is a simultaneous swap of one property for another. In theory, an investor could continue deferring capital. The 26 U. The net effect of 1031 exchange investing: The initial invested capital and the gain can continue to grow tax deferred if the asset gains value. g. 1031 Exchange Alternatives if You Want to Back Out After Starting the Process Mar 21, 2022. Add the Closing Costs and Capital Improvement Costs for Your Real Estate. These calculations are estimates for the purpose of demonstration. Assume you have a prize steer that you sell in a 1031 Exchange for $20,000 and you buy a new steer for $20,000. 3%. Most like-kind exchanges are four-party arrangements involving a qualified intermediary (QI). -Loss recognized. Team Lead. C. , a 1031 exchange) allows investors to exchange investment properties for “ like-kind ” assets to be held for productive use in a trade or business or for investment purposes. Pro | May 11 2013, 17:41 | 1031 Exchanges. 612. Since properly structured DSTs are. “It should be noted that a 1031. Under Section 1031, taxpayers can postpone paying this tax if they reinvest the profit in similar property. Partial 1031 Exchange Example. Pulling money out tax free prior to the exchange would contradict this point. In other words, conducting a 1031 exchange in Texas follows the exact same guidelines put forth by the 26 U. Under this approach, the investor would calculate their total deductions using two depreciation schedules: 1) continuation of the depreciation of $70,000 from the sold property for the remaining 17. The 1031 exchange can be particularly helpful if you want. ”. The most complete guide on partial 1031 exchanges including an example of a partial 1031 exchange. (2023 amounts) The Net Investment Income (NII) tax is applicable when the Taxpayer’s “Adjusted Gross Income” exceeds $200,000 for a single Taxpayer or. The 1031 IRS Code. It may also be used as a means of formalizing language. The definition of like kind in the realm of real estate is very broad. They allow you to exchange one piece of real estate for another, and defer capital gains taxes when you sell the first property. It works by reinvesting proceeds from the sale into a similar property. Tax straddling just provides an additional option to taxpayers selling investment property at the end of the year. Benefits. 1031 Exchange Definition. -Only a. 25 * total deferred gains of $500,000 = $125,000. Realty Exchange Corporation has created this simple Capital Gains Calculator and Analysis Form to estimate the tax impact if a property is sold and. Nevertheless, deferring taxes on as many assets as possible for as long as possible. 1031(a). Everything you need to know about 1031 exchanges, including taxpayers' ability to sell investment property and exchange for replacement property tax deferred. If the basis is $2,500, the recognized gain is $7,500. C. 1031(k)-1 (a)). Still, “the question of ‘how often’ is a gray area in the IRS code,” Lueong warns. Potential Risks of 1031 Exchange for New Construction Time Constraints. The Exchange Must be for Like-Kind Property. Here's some estimated numbers from 2006 (from Form 8824): FMV of condo: $196000. Task: Convert 65 days to months (show work) Formula: days ÷ 30. If you want to take some cash out of your relinquished property, you don’t have to roll over the entire sales proceeds into a like-kind. The tax code lets commercial property investors defer taxes when they sell a property. The new property that is received in the Sec. Defer the tax. Internal Revenue Service Code that allows investors to defer capital gains taxes on any exchange of like-kind properties for business or investment purposes. But there is an option for deferring capital gains taxes from the sale of an investment property by reinvesting the proceeds. Boot is a portion of the sales proceeds you receive from a 1031 exchange that isn’t re-invested in a replacement property. It also makes it easier to use leverage to upgrade to a larger or better-performing property. For example, if you sell a property for $200,000 but only re-invest $180,000, the $20K difference is known as boot. 643. Start Your 1031 Exchange: If. Defer the tax. This is similar to the like-kind provision under Section 1031, but no where near as liberal. Going from a residential to a commercial property is not particularly noteworthy from the perspective of a 1031 exchange. S. Most of our customers are in the process of selling or have sold investment real estate and they are looking for properties to strategically reinvest their capital into that will generate income while deferring their capital gains taxes under IRC 1031 which is called 1031. Reporting Rental Income . Washington property owners can pay up to 28. Posted 7 years ago. That's why we're giving you the same 1031 exchange calculator our exchange experts use to help investors make informed decisions. Are you interested in deferring your taxes when you transition between investment properties but don’t want to roll all of your cash proceeds forward into. S. 040, requires an exchange facilitator to either maintain a fidelity bond in an amount of not less than one million dollars that protects clients against losses caused by criminal acts of the exchange facilitator, or hold all client funds in a qualified escrow account or qualified trust. The publisher is notLet’s break down the key 1031 exchange rules in layman’s terms: 45-Day Identification Period. Jeff Peterson is a qualified intermediary who helps people with their 1031 exchanges in the following areas. The basic steps involved in a 1031 exchange are: The property owner sells the existing property, known as the relinquished property, and identifies a. This taxpayer fully depreciated the five-year property components by the time the exchange occurs. A 1031 exchange, named after Section 1031 of the Internal Revenue Code, is a tax-deferral strategy that allows real estate investors to sell an investment property — not a primary residence. “No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like kind, which is to be held either for productive use in a trade or business or for investment. Find a buyer for the property you wish to sell. However, under the 1031 property exchange regulation, property sellers can. Real estate investors are allowed to complete an exchange of. Section 1031 has been around for more than a century, but Congress is giving it another look. Work With the 1031 Exchange Experts. Property used primarily for personal use, like a primary residence or a second home or vacation home, does not qualify for like-kind exchange treatment. An investor that holds property longer than 1 year will be taxed at the favorable capital gains tax rate. The calculator for adjusted basis in real estate is not just for computing capital gains of the real estate sale but can be used for calculating capital gains on the sale or transfer of all kinds of capital. No capital gains tax is incurred on inventory assets. § 1031) states the recognition rules for realized gains (or losses) that arise as a result of an exchange of like-kind property held for productive use in trade or business or for investment. It is a short-chain primary fatty alcohol and a member of propan-1-ols. 1 Like-kind exchanges accounted for approximately 10 to 20 percent of all real estate transactions in that time frame. Top 10 Reasons Real Estate Investors Are Jumping into DSTs. Give our qualified intermediaries a call today to get your 1031 exchange off the ground. You choose to sell your current property with a $150,000 mortgage on it. California Franchise Tax Board (FTB), reporting this NON-California property. The whole point of the 1031 Exchange is moving investment money forward to invest in more property. 1031 Crowdfunding is a platform that allows investors to buy and own commercial properties that have been pre-vetted by real estate specialists and pre-qualified to meet the IRS standards for a 1031 exchange. type of Section 1031 exchange is a simultaneous swap of one property for another. 21, 2021) Project Information Form Condominium Co-op, PUD, and other Homeowner Organizations (RR105C) Clean: SFC Meeting Minutes & Exhibits (Dec. Energy can be transferred from the system to its surroundings, or vice versa, but it can't be created or destroyed. IPX1031® Essentials. Suppose that the couple purchases a replacement 1031 Exchange property for $3MM, but takes on $2MM in debt. A 1031 exchange let’s you defer your capital gains taxes on the sale of real estate. Property Y: $300,000 / total replacement property value of $1,200,000 = 0. A taxpayer will also trigger taxes if they opt to receive some cash out at the closing of their relinquished property. Identify the eligible property. S. 3. to a stockholder in exchange for their shares during a corporate reorganization or dissolution. Jean Bolger. A taxpayer can continue to exchange replacement property acquired through previous 1031 exchanges. We tried to find some amazing references about 1031 Like Kind Exchange Worksheet And Form 8824 Worksheet Template for you. A 1031 exchange helps delay this by rolling over the cost basis from your old property to your new replacement. Like-kind exchange. This sounds like they need to be similar in type, but the IRS defines like-kind broadly. 1031 877. These advantages lead people to 1031 exchanges and are a powerful tool for real estate. The seller can realize appreciation on their capital gains tax-deferred basis. To receive full tax deferral. If the seller takes any cash from the sale, that amount becomes taxable boot. The “1031” refers to the section of the Internal Revenue Code that permits such exchanges. Reverse Exchange: A type of property exchange wherein the replacement property is acquired first, and then the current property is traded away. If you do a search for "five year hold and the 1031 exchange. 137 months Conversion Table For quick reference purposes, below is a conversion table that you can use to convert from days to months. A lot of people that have been holding single-family rental property (a small duplex or fourplex) may be inclined to buy a property as a replacement that eventually could be converted. The Qualified Intermediary (QI) is a third-party facilitator that through a series of assignments acts as the party to complete the exchange with the Exchanger. 5 days. -Fair market value of boot received. Say you paid $20,000 for a piece of business or investment real estate and sold it for $30,000 ($30,000 - $20,000 = $10,000 capital gain). (TCO 11) If boot is received in a § 1031 like-kind exchange and gain is recognized, then which formula correctly calculates the basis for the like-kind property received? (Points : 2) Adjusted basis of like-kind property surrendered + gain recognized - fair market value of boot received Fair market value of like-kind property. Add these numbers together and you have determined the tax due. These sections provide that taxpayers in a 1031 Exchange that sell California Property and purchase NON-California Replacement Property will be required to file an annual information return with the. IR-2020-262, November 23, 2020. Therefore, there’s no financial gain to tax. Their services can be as disparate as their cost. Yes, a Qualified Intermediary (QI) is typically used to facilitate a 1031 Exchange . Construction delays are common, and if the property is not completed and acquired within the 180-day window, the exchange can fail, resulting in hefty tax liabilities. Doing so is known as a like-kind exchange, which allows taxpayers to grow their investment on a tax-deferred basis. In other words, an investor can exchange one investment. In a reverse exchange you acquire the replacement property before the relinquished property is sold. Rather, a 1031 exchange allows you to postpone paying tax on the gain. The property must be rented out to another person for more than 14 years of the 12-month period after the exchange. Boca Raton, FL. Includes state taxes and depreciation. The recent tax law change added a transition rule. 4) You want to simplify your life. Assuming that all the five-year property identified in the cost segregation study is affixed to the building and considered real property for Sec. 5MM in net sale proceeds. That lower rate applies to property held for more than one year. Items that Increase Basis in a 1031 Exchange. The Bottom Line. ”. In addition, you need to borrow a minimum of $150,000 to pay for it. A 1031 Exchange is a real estate transaction that allows individual investors to defer long term capital gains taxes on the profitable sale of a real estate investment property as long as the sales proceeds are reinvested into another, like kind property. Michael Burwick of Greenspoon Marder and Kyle Kadish of Advantage Wealth Solutions consider what this. The IRS oversees these exchanges and stipulates tight deadlines for completion, along with other. Regular 1031 exchange rules are already challenging enough. Also, it’s important to remember that a 1031 Exchange requires the taxpayer to purchase more real estate. 2) You haven't found the right property. A like-kind exchange can involve the exchange of one business. ” The exchange transaction can take multiple forms, as explained below. Section 1031 of the IRC makes this possible by reinvesting the proceeds from the sale of an investment property into a “like-kind” property, which allows investors to keep more profits in their pockets. The 1031 exchange equation shows how the taxpayer can quickly calculate whether there will be recognized gain based on the following principals. TAXES DUE (Effective Tax Rate)4. The enactment of the law known as the Tax Cuts and Jobs Act (TCJA), P. In a partial 1031 exchange, “boot” refers to any leftover sale proceeds subject to tax. We are doing a 1031 exchange on a property we are selling to purchase a retail plaza property. This might be obvious, but it’s worth noting: in a 1031 exchange, both the property being sold/exchanged and the property being bought need to be purchased by the same party. A loan’s amortization is the amount of time over which the loan’s payment is. A 1031 exchange is one of the most powerful remaining tax deferral strategies. If you had purchased the first steer for $10,000 you. For example, let’s assume an exchanger sells the relinquished property for. On February 24, 2023, the IRS further extended those deadlines. The 1031 Exchange Worksheet is often used in financial and accounting applications, because it allows users to import or export data from one format to. QUALIFYING PROPERTIES: A key rule about 1031 exchanges is that the transaction must take the form of an “exchange” with “like-kind” properties, rather than just a sale or one property. 1. If the names on the sale property and the exchange property are different, it won’t be accepted. Using a 1031 tax-deferred exchange requires advance planning. 2005 - Optional 1031 Contract addendum approved by the Colorado Real Estate Commission. The 1031 exchange can then only be applied to the investment portion of the property. ChEBI. There are a couple of synonyms for this transaction: starker exchange and forward 1031 exchange. The formula below shows the calculation of the profit from a 1031 exchange: Sale Price - Debt - Cost of Sale = Exchange Proceeds Debt - new debt = boot Exchange proceeds - down payment = boot Boot + boot = total boot If exchange proceeds are equal to or less than the down pay2. This 1031 Exchange calculator will estimate the taxable impact of your proposed sale and purchase. It’s a transaction that lets investors defer payment of capital gains tax on an investment property. But, some property doesn’t qualify, says the IRS. +Adjusted basis of boot given. Determining the Adjusted Basis. This section states that if an individual exchanges one investment property for another via a 1031 exchange, they may be able to defer capital gains (or losses) that they would otherwise have to pay at the time of sale. The rules for this option are described in Section 1031 of the Internal Revenue Code, which is why it is often called a "1031 Exchange". The first property—the one your client is selling—is known as the Relinquished Property, and the like-kind. ) of your intent so they can properly assist you in conducting the transaction. Pulling money out tax free prior to the exchange would contradict this point. They simply become “partial” 1031 Exchanges where the taxpayer has a partially tax deferred transaction rather than deferring all their taxes. Apportionment generally refers to the division of business income among states by the use of an apportionment formula. The $1MM in equity on this deal is less than the $1. Fortunately, more and more property managers are. Technically, there are. In this case, you may contribute additional cash when you purchase your replacement property. For example, let’s say that a QI did $240 million of exchanges in each of the last two years. Commercial real estate is a “capital asset”, which means that the government levies a tax on the profits upon the sale of the asset. , in the form of an audit report at the e-filing portal of Income-tax in Form No. Sold later absent an 1031 Exchange for $585,000, e. Give our qualified intermediaries a call today to get your 1031 exchange off the ground. NMLS #3030 How Does A 1031 Exchange Work? You can postpone paying capital gains taxes by selling a property and putting the proceeds toward a “like-kind”. But, to take full advantage of this program, the IRS has established a. If you’re planning a trip to the United States, you may want to exchange some of your money into U. They also can exchange. S. If not already, this may be the time to seek professional guidance from one of your local top-rated real estate agents and 1031 exchange companies. We can assist you in complying with. These calculations are estimates for the purpose of demonstration. One option to consider is to complete your exchange by re-investing ALL of your equity (1031 funds) into a replacement property of equal or greater value; and then later in a subsequent (separate post. It’s best to work with. Each time, the adjusted basis of the property is carried over in the manner described above. Your replacement has a $700,000 basis, also debt free. 1031 Exchange and New Construction/Not yet constructed? Fausto Carosella Poster Pro. Combining 1031 and primary residence. The Taxpayer that Sold and Acquired the Exchange Property Must be the Same. Regular 1031 exchange rules are already challenging enough. Having exchanged your $800,000 property for a $700,000 asset, cash boot of $100,000 is realized. Section 121: Tax exclusion applies to a primary residence where the property has been used as a main residence for at least two of the past five years. I'm having a hard time calculating the taxes owed. Say you’re selling relinquished rental property for $500,000 while wanting $50,000 in cash. For many, this is a popular – and effective – strategy through which to grow and diversify a real estate portfolio over time. A 1031 exchange allows you to avoid depreciation recapture for the same reason it allows you to avoid capital gains taxes. Adjusted basis of like-kind property surrendered. If you’re working with a qualified intermediary,. A 1031 exchange, named after Section 1031 of the Internal Revenue Code, is a tax-deferred exchange that allows investors to exchange one investment or business property for another of like-kind while deferring the payment of capital gains taxes. 37. The formula below shows the calculation of the profit from a 1031 exchange: Sale Price - Debt - Cost of Sale = Exchange Proceeds Debt - new debt = boot Exchange proceeds - down payment = boot Boot + boot = total boot If exchange proceeds are equal to or less than the down pay A 1031 exchange is a real estate investing tool that allows investors to exchange an investment property for another property of equal or higher value and defer paying capital gains tax on the profit they make from the sale. We also offer a 1031 deadline calculator. But of course, these rules aren’t mandated. 1. 400 W. 8% some states impose on higher-income earners. For the purposes of a 1031 exchange, “you” can certainly be an individual investor. Maximize your gain. Tax-deferred doesn't mean tax-free. When you sell an investment property, you are disposing of a tangible asset that the IRS classifies as “real property. A 1031 exchange comes from Section 1031 of the U. §1. A 1031 Exchange Delaware Statutory Trust (DST) is a legal entity created for the purpose of holding title to investment real estate. When 1031 Exchanges originated over 100 years ago, it was necessary for the Seller and Buyer to literally exchange the two associated properties - a lot has changed since that time. When you are ready to begin your 1031 exchange in Florida, Idaho, Nevada, Oklahoma, Mississippi, Illinois, Kansas, Washington, Florida, Arizona, Utah, California, or anywhere else, we are here to help, with some of the lowest fees in the country, starting at just $695. Conclusion. 1. A 1031 exchange (often referred to as a like-kind exchange or a 1031 tax deferred exchange), allows investors to sell a property held for trade, business, or investment ("relinquished property") and exchange it for a "like-kind" property also to be held for trade, business, or investment ("replacement property") allowing investors to. 1031(a)-3 of the regulations, A determines that the section 1245 assets are real property for section 1031 like-kind exchange treatment. Reverse exchanges were created in order to help. A 1031 Exchange in commercial real estate is a transaction that allows a commercial property seller to defer paying taxes on the sale of the property if they use the funds to buy another, similar property within a specific period of time. The law allows businesses to sell real property and then postpone paying tax on the gain if they invest the proceeds in another similar property. 1031 Learn with flashcards, games, and more — for free. Code section 721 states that if you contribute property for an interest in a partnership, it is tax-free to the extent the only property received in. In response to this change, questions arose on what was defined as "real. 1031 Exchange Companies, also known as Qualified Intermediaries (QIs), are entities that facilitate property transactions under Section 1031 of the IRS tax code, allowing real estate investors to defer capital gains taxes. This is to ensure that the IRS will have a record of the transaction. Capital gains tax might result from selling your home, stocks, bonds, commodities, mutual funds, a business, and other similar capital assets. There are two ways to depreciate real estate post 1031 Exchange. The $500,000 difference is taxable. Boot received is the money or the fair market value of “other property” received by the taxpayer in an exchange. To calculate the 1031 exchange basis, you first need to determine the adjusted basis of the property you are relinquishing. However, investors can opt-out of two schedule depreciation and depreciate the calculated cost basis on a single schedule. A 1031 exchange of multiple properties or assets occurs if there is one or more relinquished properties being sold and transferred and/or one or more like-kind replacement properties being identified and acquired. It sells for $650,000. The realized and recognized gain might seem similar at first, but those are different when it comes to taxation. 1 Vote 11 Replies. You’re required to pay capital gains tax on that money. 800-795-0769 -Ed Horan, CES® is Senior Exchange Consultant for Realty Exchange Corporation, Gainesville, VA, and author of How to Do a Like Kind Exchange Using a Qualified Intermediary. Yes, a Qualified Intermediary (QI) is typically used to facilitate a 1031 Exchange . As the national leader in 1031 Exchange services, IPX1031 has the financial assurances, security and expertise essentials to protect your funds and provide answers and guidance throughout the 1031 Exchange process. com help customers to defer taxes and make better investment decisions. Propan-1-ol is the parent member of the class of propan-1-ols that is propane in which a hydrogen of one of the methyl groups is replaced by a hydroxy group. 1031 to apply only to exchanges of real property. Fortunately, you do not have to memorize the formula for calculating your 1031 exchange capital gains. , 15 the Tax Court referred to the regulation as providing a safe harbor. However, a 1031 Exchange can be a complicated. 1 CNY = 0. e1031xchange did a fantastic job from start to finish. Under IRC Section 1031, an exchanger or taxpayer executing a delayed exchange has 45 calendar days from the closing date of the sale of their relinquished property to formally identify a replacement property or properties.