It is possible to defer all taxes and keep one hundred percent of your capital through 1031 exchange. What is 1031 exchange? The 1031 exchange is one legal way to eliminate capital gains taxes because of the sale of a real estate property. When it comes to a 1031 exchange, you can replace one property which is "like kind" of the relinquished property. 

There should be an equal value of the replacement property and the relinquished property in order to get a complete deferral, and the investor may need to make a payment for the capital gains taxes on proceeds that were not reinvested. There should be an identical ownership title both for the replacement and relinquished property. A 1031 Gateway real estate investor can, therefore, exchange a residential rental property for another commercial property and vice versa. First, you need to decide the property you want to exchange. 

Next, you'll need to sell your property but you need to have the funds held by a trusted and qualified intermediary because relinquishing your property means not allowing you to take the receipt of the proceeds. The third step is identifying the replacement property by working with your investment advisor or real estate broker once the trusted and qualified intermediary receives the proceeds from the real estate sale. The last step is processing an exchange so the qualified intermediary will be forwarding the funds for the closing. You can use the 1031 exchange calculator from to know the best deal for your real estate investment or business property. 


IRS is very strict about deadlines, so you need to know the timeline for 1031 exchange. The countdown starts once you close escrow on the real estate sale of your business property or investment. You have forty-five calendar days to determine the replacement property and one-hundred-eighty calendar days for closing the escrow on your replacement property. There are three identification rules you need to bear in mind, which are the three-property rule, the 200% rule, and the 95% rule. The three-rule means identifying three possible replacement properties and purchasing any or all of them regardless of the total price in order to complete your exchange. Identifying more than three possible replacement properties is also possible under the 200% rule as long as the total price will not exceed 200% of your relinquished property's value. You can also identify as many replacement properties as you like as long as you purchase 95% of their total value. Make sure to check out this website at and know more about real estate.