There are four main types of 1031 exchanges:
Delayed, Reverse, Simultaneous, and Build-to-suit.
Each serves different investment strategies and timing needs.
Process: Sell your property first. The proceeds go to a Qualified Intermediary (QI). Then identify and purchase the replacement within 180 calendar days.
Timing: You have 45 calendar days to identify replacement property and 180 days to close.
Best for: Investors who have sold a property and need time to find a suitable replacement.
Popularity: Accounts for about 90% of all 1031 exchanges.
Most Common Exchange
Process: Buy the replacement property first, then sell the original property within 180 days.
Complexity: Requires planning & creative financing since Allied temporally holds the property purchased in their LLC.
Best for: Hot markets where you need to secure a new property before selling the old one.
Popularity: Roughly 5% of exchanges.
More expensive: Requires more planning, Complex & requires special financing.
Process: Sell and buy properties on the same day.
Coordination: Requires precise timing and coordination between all parties.
Best for: Investors with tightly aligned transactions or using a qualified intermediary.
Risk: If either side delays, the exchange may fail.
Rare situations where both buyer and seller can coordinate a same-day trade, at the exact same time, coordinated by a QI
Process: Use exchange funds that are held by your (QI) and who is your titleholder to build or improve the replacement property.
Requirements: All improvements must be completed within the 180-day window.
Best for: Investors wanting to customize or upgrade their new property.
Popularity: About 3% of exchanges.
More expensive: Complex & requires special structuring
1. Defer Capital Gains Taxes - A 1031 exchange lets you defer federal capital gains tax, depreciation recapture, and (often) state taxes—keeping more of your equity working for you.
2. Increase Buying Power - Because you’re not paying taxes immediately, you can reinvest 100% of your sale proceeds into a new property—often enabling you to buy a larger or better asset.
3. Grow Your Portfolio Faster - Tax deferral allows compounding to work in your favor. Over multiple exchanges, you can snowball into significantly larger assets.
4. Upgrade Into Higher-Quality Properties - Move from older, management-heavy rentals into newer, more profitable, or more passive investments.
5. Reposition Your Portfolio for Cash Flow - Exchange into properties with:
• Higher rents
• Better tenant profiles
• More stable income (e.g., triple-net leases)
6. Consolidate Multiple Properties - Sell several smaller rentals and exchange into a single, easier-to-manage property—great for reducing headaches.
7. Diversify Your Portfolio or do the opposite: - Sell one property and diversify into multiple income streams (retail, multifamily, industrial, etc.).
8. Move Your Investments to a Stronger Market - Shift your capital into better economic and demographic markets without paying taxes along the way.
9. Reset or Improve Depreciation - While depreciation resets don’t happen in a standard like-kind exchange, you can often increase your depreciable basis if you buy up—resulting in larger annual write-offs.
10. Estate Planning Benefits - If you hold the property until death, the deferred taxes disappear due to step-up in basis. Your heirs can inherit the asset tax-free (on gains).
Before you close on your property let your real estate advisor know that you are doing a 1031 exchange and then follow the steps below.
Get on the phone with an Allied 1031 Exchange Specialist (888) 738-1031
When you enter into a contract to sell, we’ll get the exchange started.
On the date of sale, a 45-day ID period to select your new property begins, as does the 180-day exchange clock.
Once you open escrow on the new property, Allied 1031 Exchange will help you finalize the exchange
Allied 1031 Exchange will be named as your accommodator on your settlement statements which you can provide to your tax professional.
Realtors that use the 1031 Exchange as a marketing tool can...
Increase listing inventory
Increase number of buyers
Increase number of sales
Seperate themselves from the competition
Realtors when working with investor clients sometimes questions come up that might be uncomfortable for you to answer. It's our job at Allied 1031 Exchange to keep you out of harms way.
Simply tell your client "I am a licensed real estate agent and I take on liability by discussing real estate law. I am going to have my 1031 experts at Allied 1031 Exchange give you a call."
Allied 1031 Exchange is here to help!
