You sell an investment property in Atlanta for $1.2 million. You bought it for $600,000 a decade ago. Without a 1031 exchange, you owe roughly $90,000 in federal capital gains tax plus another $33,000 to Georgia. With a properly executed exchange, you owe nothing today and roll the full amount into your next property.
That is the promise of IRC Section 1031. And it is real. But the rules are unforgiving. Miss a deadline by one day, touch the proceeds for even a moment, or buy the wrong type of property, and the entire deferral disappears. The IRS does not grant extensions, does not accept excuses, and does not care that your closing attorney was on vacation.
This guide covers what qualifies, how the timelines work, identification rules, qualified intermediary requirements, Atlanta-specific strategy, and the mistakes that kill exchanges. It is written from experience working with investors across the metro Atlanta market.
Important: This article is for educational purposes only and does not constitute tax, legal, or financial advice. 1031 exchange rules are complex and fact-specific. Before executing any exchange, consult with a qualified tax attorney and CPA who specialize in real estate taxation. Tax laws change, and individual circumstances vary. Nothing here should be relied upon as a guarantee of any tax outcome.
What Is a 1031 Exchange?
A 1031 exchange, named after Section 1031 of the Internal Revenue Code, allows you to defer capital gains tax when you sell an investment property and reinvest the proceeds into another "like-kind" property. The key word is defer. You are not eliminating the tax. You are postponing it until you sell the replacement property in a taxable transaction.
The practical effect is that your full equity keeps working for you. Instead of sending $90,000 to the IRS and $33,000 to Georgia, you put that $123,000 into your next investment. Over 20 or 30 years of exchanging, the compounding effect of keeping that capital deployed is substantial.
Before the Tax Cuts and Jobs Act of 2017, Section 1031 applied to all types of property, including equipment, vehicles, and artwork. Since January 1, 2018, per IRS guidance, 1031 exchanges are limited exclusively to real property. You cannot exchange a fleet of trucks for an apartment building anymore. Real estate only.
The Like-Kind Requirement
"Like-kind" is broader than most people think. Per IRS Publication 544 and Treasury Regulations, any real property held for investment or business use can be exchanged for any other real property held for investment or business use. The properties do not need to be the same type.
Valid Like-Kind Exchange Examples
- Single-family rental to multifamily apartment: Sell a rental house in Decatur, buy a four-unit building in East Atlanta Village.
- Office building to raw land: Sell a commercial property in Midtown, buy undeveloped acreage in Cherokee County held for investment.
- Retail strip center to warehouse: Sell a retail building on Peachtree, buy an industrial property near Hartsfield-Jackson.
- Vacation rental to apartment complex: Sell a short-term rental cabin in Blue Ridge, buy a 12-unit apartment in Sandy Springs.
- One state to another: Sell a rental property in Georgia, buy an investment property in Florida or Tennessee.
What Does NOT Qualify
- Your primary residence: The home you live in is not investment property, per IRC Section 1031(a)(2).
- Fix-and-flip properties: Property held primarily for sale (dealer property) does not qualify. If you buy, renovate, and sell within months, the IRS may classify you as a dealer, not an investor.
- Partnership interests: You cannot exchange a partnership interest in a real estate LLC for a direct ownership interest in property (though there are workarounds involving tenancy-in-common structures that a tax attorney can explain).
- Personal property: Since 2018, equipment, vehicles, collectibles, and other non-real-estate assets are excluded from Section 1031.
The Two Deadlines That Cannot Be Missed
A 1031 exchange has two absolute deadlines per Treasury Regulation 1.1031(k)-1. Both start on the day you close the sale of your relinquished property (the property you are selling). Neither can be extended for any reason.
45-Day Identification Period
You have exactly 45 calendar days from the closing of your relinquished property to identify, in writing, the replacement properties you intend to buy. This identification must be delivered to your qualified intermediary or another party involved in the exchange (not your attorney, agent, or anyone who is a "disqualified person"). The identification must include the legal description, street address, or other unambiguous description of each property. Verbal identification does not count. Email to your QI typically qualifies as written identification, but confirm with your QI in advance.
180-Day Exchange Period
You must close on the replacement property (or properties) within 180 calendar days of selling the relinquished property. This deadline also cannot exceed the due date of your tax return (including extensions) for the year of the sale. If you sell on October 15 and your tax return is due April 15 the following year, your exchange period is 182 days by calendar but only 180 by statute, so the 180-day rule governs. Always file for a tax extension if your exchange period could bump up against your filing deadline. Filing an extension is free and buys you until October 15.
Here is a practical example. You close on the sale of your Atlanta rental property on March 1, 2026. Your 45-day identification deadline is April 15, 2026. Your 180-day closing deadline is August 28, 2026. If you have not identified replacement properties by April 15, the exchange fails. If you have not closed on the replacement by August 28, the exchange fails. In both cases, the capital gains tax becomes due immediately.
The Three Identification Rules
When identifying replacement properties during the 45-day window, you must follow one of three rules per Treasury Regulation 1.1031(k)-1(c). You choose which rule works best for your situation.
The Three-Property Rule
You can identify up to three replacement properties regardless of their fair market value. This is the most commonly used rule. If you sold a $1 million property, you could identify a $2 million property, a $1.5 million property, and a $900,000 property. You only need to close on one (or more) of them, as long as the total acquisition value equals or exceeds the sale price of your relinquished property to fully defer the gain.
The 200% Rule
You can identify any number of properties as long as their total fair market value does not exceed 200% of the fair market value of the relinquished property. Sold for $1 million? You can identify properties totaling up to $2 million. This is useful when you are considering multiple smaller replacement properties. If you are exchanging out of one large asset and into several smaller ones, the 200% rule gives you more flexibility than limiting yourself to three options.
The 95% Rule
You can identify any number of properties at any total value, but you must close on at least 95% of the total identified value. This rule is rarely used by individual investors because failing to close on even a small portion of the identified value disqualifies the entire exchange. Institutional investors with high certainty of closing may use it, but for most Atlanta investors, the three-property rule or the 200% rule are far safer choices.
Qualified Intermediary Requirements
The qualified intermediary (QI) is the backbone of a 1031 exchange. Per Treasury Regulation 1.1031(k)-1(g)(4), you cannot personally receive the sale proceeds at any point during the exchange. The QI holds the funds in escrow from the moment your relinquished property closes until the replacement property closes. If the proceeds touch your hands or any account you control, even briefly, the exchange is disqualified.
Your QI cannot be anyone who has acted as your agent for any purpose within the prior two years. This specifically disqualifies your real estate agent, your CPA, your attorney, your employee, and your investment advisor. The QI must be an independent third party whose sole role is facilitating the exchange.
What to Look for in a QI
- Segregated accounts: Your exchange funds should be held in a separate, FDIC-insured account, not commingled with the QI's operating funds or other clients' exchange funds.
- Fidelity bond and E&O insurance: The QI industry is federally unregulated. A fidelity bond protects against employee theft. Errors and omissions insurance protects against QI mistakes. Both should be in the millions.
- Track record: Ask how many exchanges they have handled, how long they have been in business, and whether they have ever had a failed exchange due to their error. Get references.
- Interest on escrow: Some QIs earn interest on your exchange funds and keep it. Others pass the interest through to you (minus a small administrative fee). On a $1 million exchange held for 90 days, the interest can be several thousand dollars.
Boot and Partial Exchanges
A "partial exchange" happens when you do not reinvest all of the proceeds or when the replacement property has lower value or less debt than the relinquished property. The portion you do not reinvest is called "boot," and boot is taxable in the year of the exchange.
Boot comes in two forms. Cash boot is the most obvious: if you receive $50,000 from the exchange proceeds, that $50,000 is taxable. Mortgage boot (debt relief) is less obvious but just as real: if you had a $400,000 mortgage on the relinquished property and only take on a $300,000 mortgage for the replacement, the $100,000 in debt reduction is boot.
Example: Partial Exchange with Mortgage Boot
You sell a rental duplex in Grant Park for $900,000. Original purchase price was $450,000. You have a $200,000 mortgage on it. After paying off the mortgage, closing costs, and agent commissions, your QI holds $650,000 in exchange funds. You buy a replacement property in Sandy Springs for $850,000 with a $150,000 mortgage, putting down the full $650,000 from your exchange. But the debt on the replacement ($150,000) is less than the debt on the relinquished property ($200,000). That $50,000 difference is mortgage boot and is taxable as capital gain in the year of the exchange.
How to Avoid Boot
To defer 100% of the gain, you must meet two conditions: (1) the replacement property must be equal to or greater in total value than the relinquished property, and (2) the equity you invest must be equal to or greater than the equity you had in the relinquished property. If you take on less debt, you need to add cash from outside the exchange to make up the difference. Many investors trip over the debt replacement requirement because they do not realize it exists until their CPA calculates the tax bill after closing.
Planning a 1031 Exchange in Atlanta?
We work with investors at every level who are buying and selling investment properties across metro Atlanta. We can connect you with experienced qualified intermediaries and tax professionals, and help you identify replacement properties that fit your investment criteria.
Reverse Exchanges and Improvement Exchanges
Not every exchange follows the standard sell-then-buy sequence. Two variations exist for situations where the standard forward exchange does not fit.
Reverse Exchange
In a reverse exchange, you acquire the replacement property before you sell the relinquished property. Per Revenue Procedure 2000-37, an Exchange Accommodation Titleholder (EAT) takes title to either the replacement or the relinquished property while the exchange is completed. You still have 45 days to identify which property is the relinquished property and 180 days to complete the entire transaction. Reverse exchanges are more expensive (typically $5,000 to $15,000 in additional fees) and more complex, but they solve the common problem of finding the perfect replacement property before your current property sells.
Improvement (Construction) Exchange
An improvement exchange, also called a build-to-suit or construction exchange, allows you to use exchange funds to make improvements on the replacement property before taking title. The EAT holds title while improvements are made using exchange funds. The improvements must be completed, and you must take title, within the 180-day exchange period. This is useful when the replacement property needs significant renovation or when you want to build on vacant land. The rules are specific: improvements must be identified in the 45-day identification, and the property must be "substantially the same" as what was identified when you take title. An experienced QI and tax attorney are essential for improvement exchanges.
Atlanta-Specific 1031 Exchange Strategy
Atlanta's investment property market offers several advantages for 1031 exchange buyers. The metro area has a diverse inventory of investment-grade properties across multiple asset classes and price points, which makes it easier to find suitable replacement properties within the 45-day window. For a deeper look at specific neighborhoods and their investment characteristics, see our Atlanta investment properties guide.
Neighborhoods Strong for Exchange Acquisitions
- Buckhead: Higher price points ($700K to $3M+ for rentable properties), typically lower cap rates (3.5% to 5%), but strong long-term appreciation. Good for investors prioritizing equity growth over cash flow. Condo rentals in the Buckhead Village area attract corporate tenants paying premium rents.
- Sandy Springs / Dunwoody: Perimeter market with strong demand from corporate relocations. Cap rates typically 4% to 6% for single-family rentals. Good school districts drive consistent tenant demand from families. Properties in the $400K to $800K range are common exchange targets.
- East Atlanta / Kirkwood / Edgewood: Intown neighborhoods with cap rates historically in the 5% to 7% range. Duplexes and small multifamily properties are available in the $350K to $700K range. Walkability and proximity to the BeltLine drive both rental demand and appreciation.
- Westside / West Midtown: Rapid development corridor benefiting from the $5 billion+ in investment around the Westside BeltLine. Properties acquired here through 1031 exchanges in 2018 to 2022 have seen significant appreciation. Current entry points are higher, but the long-term growth trajectory remains strong per Atlanta Regional Commission projections.
- Suburban multifamily (Gwinnett, Cobb, Clayton): Small apartment buildings (4 to 20 units) in suburban markets often offer the highest cap rates in metro Atlanta (6% to 9%). These properties are popular 1031 targets for investors moving up from single-family rentals into multifamily portfolios. Inventory turns over regularly, making it easier to identify and close within the exchange timeline.
Georgia State Tax Considerations
Georgia conforms to the federal treatment of 1031 exchanges, meaning the deferral applies to both your federal and Georgia state income tax liability. Georgia's top individual income tax rate has been declining under HB 1437 (signed in 2022), dropping from 5.75% to 5.49% in 2025, with further reductions planned through 2029 contingent on revenue targets being met, per the Georgia Department of Revenue.
On a $500,000 capital gain, Georgia state income tax at 5.49% would be approximately $27,450. Combined with federal capital gains tax (typically 15% or 20% depending on income, plus the 3.8% net investment income tax for high earners per IRC Section 1411), the total tax bill on a half-million-dollar gain can easily exceed $140,000. A 1031 exchange defers all of it.
One important note: if you exchange into a property in a state with no income tax (Florida, Tennessee, Texas), Georgia may still claim the right to tax the deferred gain when you eventually sell without exchanging. This is an area where multi-state tax law gets complex. A CPA experienced in multi-state real estate transactions should review any cross-state exchange strategy before you commit.
Cost Basis Tracking
When you do a 1031 exchange, your cost basis carries over to the replacement property (adjusted for any boot received and exchange expenses). This is critical to understand because your basis determines your depreciation deductions and your eventual gain when you sell without exchanging.
Example: You bought Property A for $500,000. You sell it for $900,000 and do a 1031 exchange into Property B, which costs $950,000. Your basis in Property B is not $950,000. It is $500,000 (your original basis) plus $50,000 (the additional cash you invested above the exchange proceeds), or $550,000. If you later sell Property B for $1.2 million without exchanging, your taxable gain is $650,000, not $250,000.
After multiple exchanges over years or decades, the cost basis can be dramatically lower than the current property value. This is the trade-off of 1031 exchanges: you defer the tax, but the deferred gain keeps growing. The counter-argument, and it is a strong one, is that the compounding effect of keeping the full equity invested typically far outweighs the eventual tax bill. And per IRC Section 1014, if you hold the property until death, your heirs receive a stepped-up basis and the entire deferred gain may be eliminated.
Keep meticulous records. Every exchange document, every closing statement, every capital improvement receipt needs to be stored permanently. Your CPA will need this documentation when you eventually sell, and the IRS can audit 1031 exchanges for years after the fact. Per IRS guidelines, maintain records for at least three years after filing the return for the year you dispose of the property in a taxable transaction.
Mistakes That Kill 1031 Exchanges
We have seen investors lose six-figure tax deferrals over avoidable errors. Here are the most common ones.
Missing the 45-Day Identification Deadline
This is the number one killer. The seller closes, the investor gets busy looking at properties, and suddenly day 45 has passed without written identification to the QI. There is no cure. There is no extension. The exchange is dead. Set multiple calendar reminders starting at day 30. Identify properties early, even if you are not 100% certain, because you can change your identification up until the deadline (but not after).
Touching the Exchange Proceeds
If the sale proceeds are deposited into your personal account, even for one day, the exchange is disqualified. This is called "constructive receipt." The QI must receive the funds directly from the closing. Make sure your closing attorney and title company are coordinating with your QI before the sale closes. This is not the kind of mistake you fix after the fact.
Not Setting Up the QI Before Closing
The QI must be in place before the sale of the relinquished property closes. If you close first and then try to set up a 1031 exchange after the fact, it is too late. The exchange agreement must be executed, and the QI must be designated to receive the proceeds, prior to closing. We have seen investors decide to do a 1031 exchange the week before closing and scramble to get a QI in place. Start the QI engagement at least 30 days before your expected closing date.
Using a Disqualified Person as the QI
Your attorney, CPA, real estate agent, or any employee who has worked for you in the past two years cannot serve as your QI. Per the Treasury Regulations, these are "disqualified persons." An exchange facilitated by a disqualified person is invalid. Use a dedicated, independent 1031 exchange company.
Buying Down in Value Without Accounting for Boot
Investors sometimes sell a $1.2 million property and buy a $900,000 replacement, thinking they have done a successful exchange. They have not. The $300,000 difference is boot and is fully taxable. Even if you reinvest every dollar from the QI, the reduced property value alone creates taxable boot. To fully defer, the replacement must be equal to or greater in total value.
Forgetting About Depreciation Recapture
When you eventually sell a 1031 exchange property without exchanging again, you owe tax not only on the capital gain but also on accumulated depreciation (recaptured at 25% per IRC Section 1250). After multiple exchanges and decades of depreciation, this recapture amount can be substantial. Some investors are shocked to learn that their depreciation recapture bill alone exceeds $100,000. A 1031 exchange defers this too, but it does not eliminate it (unless the stepped-up basis at death applies).
A Worked Example With Real Numbers
Let us walk through a realistic Atlanta 1031 exchange scenario from start to finish.
The Sale (Relinquished Property)
An investor sells a single-family rental in Kirkwood for $650,000. She bought it in 2016 for $280,000 and has claimed approximately $81,000 in depreciation over the holding period. Her adjusted basis is $199,000 ($280,000 minus $81,000 depreciation). The remaining mortgage balance at sale is $120,000. Selling costs (agent commission, closing costs, and repairs) total $42,000. After paying off the mortgage and selling costs, the QI holds $488,000 in exchange funds.
The Tax Bill Without a 1031 Exchange
Her total gain is $451,000 ($650,000 sale price minus $199,000 adjusted basis). Federal capital gains at 20% (she is a high earner): $90,200. Net investment income tax at 3.8% per IRC Section 1411: $17,138. Depreciation recapture at 25% on $81,000: $20,250. Georgia state income tax at 5.49%: $24,760. Total tax bill: approximately $152,348. That is money that leaves her real estate portfolio permanently.
The Replacement (1031 Exchange)
She identifies three properties within 45 days: a duplex in East Atlanta ($550,000), a four-unit building in Decatur ($725,000), and a single-family rental in Sandy Springs ($680,000). She closes on the Decatur four-unit for $725,000, financing $237,000 with a new mortgage and using the full $488,000 from her QI. The new mortgage ($237,000) exceeds the old mortgage ($120,000), so there is no mortgage boot. The replacement property value ($725,000) exceeds the relinquished property value ($650,000), so there is no cash boot. The exchange is clean. She defers the full $152,348 in taxes and deploys her entire equity position into a property that generates more rental income.
Her New Basis
Her basis in the Decatur property is $274,000 (the original $199,000 adjusted basis, plus $75,000 in new cash she added above the exchange funds). When she eventually sells the Decatur property without exchanging, her gain will be calculated from this $274,000 basis, not from the $725,000 purchase price. The deferred gain follows her.
The Bottom Line
A 1031 exchange is one of the most powerful tools available to real estate investors. The ability to defer capital gains tax indefinitely, and potentially eliminate it through the stepped-up basis at death, allows you to compound wealth at a rate that taxable sales simply cannot match.
But the rules are absolute. The 45-day identification deadline does not bend. The 180-day closing deadline does not bend. The QI requirement does not have exceptions. And the boot rules will generate a tax bill if you are not careful about property value and debt replacement.
Atlanta's market is well-suited for 1031 exchanges. The diversity of investment property types, the range of price points across metro neighborhoods, and the steady population and job growth that drives rental demand all work in the exchange investor's favor. Whether you are moving from a single-family rental into a small multifamily, consolidating several properties into one larger asset, or diversifying across neighborhoods, the metro Atlanta market provides the inventory to make it work.
Start with your team. Engage a qualified intermediary 30 or more days before your expected sale. Consult a tax attorney and CPA who specialize in real estate exchanges. Work with a real estate agent who understands investment properties and can help you identify suitable replacements quickly. The investors who execute successful exchanges are the ones who plan ahead, respect the deadlines, and surround themselves with professionals who have done this before.
Frequently Asked Questions
Can I do a 1031 exchange on my primary residence?
No. Per IRC Section 1031, only property held for productive use in a trade or business or for investment qualifies. Your primary residence does not meet this requirement. However, if you convert a rental property into your primary residence (or vice versa), there are specific rules about holding periods and partial exclusions under IRC Section 121 that may apply. The IRS has scrutinized these conversion strategies closely since the Tax Cuts and Jobs Act of 2017 added a five-year holding requirement for combined Section 121/1031 transactions. Consult a tax attorney before attempting any conversion strategy.
What is the 45-day identification deadline and can it be extended?
The 45-day identification period starts the day you close on the sale of your relinquished property and cannot be extended under any circumstances. Weekends and holidays count. If the 45th day falls on a Saturday, your deadline is still Saturday, not the following Monday. You must provide written identification of replacement properties to your qualified intermediary before midnight on day 45. Late identification, even by one day, kills the exchange entirely. The IRS has granted no exceptions to this deadline, not for natural disasters, postal delays, or any other reason.
How does Georgia state income tax treat 1031 exchanges?
Georgia conforms to the federal treatment of 1031 exchanges, meaning the deferral applies to both federal and Georgia state income tax. Georgia's top individual income tax rate is 5.49% as of 2026 (reduced from 5.75% under HB 1437, signed in 2022, which phases rates down through 2029). If you sell an investment property in Georgia without a 1031 exchange, you will owe both federal capital gains tax and Georgia state income tax on the gain. The 1031 exchange defers both. However, if you exchange into a property in a different state, the original state may still claim tax on the deferred gain when you eventually sell without exchanging. Consult a CPA who understands multi-state tax implications.
What happens if I receive boot in a 1031 exchange?
Boot is any non-like-kind property received in the exchange, most commonly cash or debt relief. If you sell a property for $800,000 with a $200,000 mortgage and buy a replacement for $700,000 with a $150,000 mortgage, you have received boot in two forms: $100,000 in reduced property value and $50,000 in debt relief. Boot is taxable in the year of the exchange. To avoid boot entirely, the replacement property must be equal to or greater in both value and equity than the relinquished property. Many investors accidentally trigger boot by paying off existing debt without replacing it with equal or greater new debt.
Do I need a qualified intermediary for a 1031 exchange?
Yes, a qualified intermediary (QI) is required. Per Treasury Regulation 1.1031(k)-1(g)(4), you cannot touch the proceeds from the sale of your relinquished property at any point during the exchange. The QI holds the funds in escrow between the sale and the purchase. Your QI cannot be someone who has served as your agent within the past two years, which excludes your real estate agent, attorney, accountant, or employee. The QI industry is unregulated at the federal level, so choose carefully. Look for QIs that carry fidelity bonds, errors and omissions insurance, and keep exchange funds in segregated, FDIC-insured accounts.
What is a reverse 1031 exchange and when would I use one?
A reverse exchange allows you to buy the replacement property before selling the relinquished property. This is useful when you find the perfect acquisition but have not yet sold your current investment property. In a reverse exchange, an Exchange Accommodation Titleholder (EAT) takes title to either the replacement property or the relinquished property while you complete the transaction. Per Revenue Procedure 2000-37, you must complete the entire exchange within 180 days. Reverse exchanges are more expensive than standard forward exchanges (typically $5,000 to $15,000 in additional fees) and require more sophisticated legal and financial planning. Not all QIs handle reverse exchanges.
Can I do a 1031 exchange across state lines?
Yes, 1031 exchanges work across state lines. You can sell an investment property in Georgia and buy a replacement in Florida, Texas, Tennessee, or any other state. The IRS does not restrict exchanges to the same state. However, multi-state exchanges create state tax complexity. Georgia may require you to file a return and pay state tax on the deferred gain when you eventually sell the replacement property in a non-exchange transaction, even if that property is located in another state. Some states handle this through withholding requirements or claw-back provisions. A CPA experienced in multi-state real estate taxation should review any cross-state exchange before you proceed.
What are typical qualified intermediary fees?
QI fees for a standard forward 1031 exchange typically range from $750 to $1,500. This usually covers the basic exchange agreement, escrow of funds, and document preparation. Reverse exchanges cost significantly more, typically $5,000 to $15,000, because the EAT structure requires additional legal work, separate LLCs, and more administrative oversight. Improvement exchanges also carry higher fees. Some QIs charge flat fees while others charge a base fee plus a percentage of the exchange amount. Be sure to ask about all fees upfront, including wire transfer fees, document fees, and any charges related to extensions or complications.
What is the 200% rule in a 1031 exchange?
The 200% rule is one of three identification rules you can use during the 45-day identification period. Under this rule, you can identify any number of replacement properties as long as their combined fair market value does not exceed 200% of the fair market value of the relinquished property you sold. For example, if you sold a property for $1 million, you can identify replacement properties totaling up to $2 million in combined value. This rule gives you more flexibility than the three-property rule when you are considering several smaller properties as replacements. You must still close on enough of the identified properties to absorb all the exchange funds within the 180-day exchange period.
What happens to my 1031 exchange if I die before selling the replacement property?
This is one of the most significant tax planning advantages of 1031 exchanges. If you pass away while holding a property acquired through a 1031 exchange, your heirs receive a stepped-up basis to the property's fair market value at the date of death, per IRC Section 1014. All of the deferred capital gains from every prior exchange in the chain are permanently eliminated. An investor who deferred $500,000 in gains across multiple exchanges over 20 years would pass that property to heirs with zero capital gains tax owed on those deferred amounts. This makes 1031 exchanges a powerful component of long-term estate planning, though tax laws can change. Work with an estate planning attorney to structure ownership appropriately.
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Sources
- Internal Revenue Code Section 1031 - Like-kind exchange rules, property qualification requirements, and deferral mechanics as codified in Title 26, U.S. Code.
- Treasury Regulation 1.1031(k)-1 - Deferred exchange rules including identification period, exchange period, qualified intermediary requirements, and safe harbors.
- IRS Publication 544 (Sales and Other Dispositions of Assets) - Guidance on like-kind exchange reporting, boot calculation, and basis determination.
- Revenue Procedure 2000-37 - IRS safe harbor for reverse exchanges using Exchange Accommodation Titleholders (EATs).
- Georgia Department of Revenue - Georgia individual income tax rates, state conformity with federal 1031 treatment, and HB 1437 rate reduction schedule.
- IRC Section 1014 - Stepped-up basis rules for property acquired from a decedent, relevant to estate planning with 1031 exchange properties.
- IRC Section 1411 - Net Investment Income Tax (3.8% surtax) applicable to capital gains for high-income taxpayers.
Tax rates, regulations, and exchange rules referenced in this article reflect conditions as of early 2026 and are subject to change through legislation, IRS guidance, or judicial interpretation. Specific tax outcomes depend on individual circumstances. Consult a qualified tax professional for advice specific to your situation.
Disclaimer: This article is for informational and educational purposes only and does not constitute tax, legal, financial, or investment advice. 1031 exchange rules are complex, fact-specific, and subject to change. The examples in this article are illustrative and may not reflect your specific tax situation. Actual tax outcomes depend on individual circumstances including income level, filing status, state of residence, property type, holding period, depreciation history, and other factors. Nothing in this article guarantees any particular tax result. Before executing a 1031 exchange, consult with a qualified tax attorney and CPA who specialize in real estate taxation. The Luxury Realtor Group does not provide tax or legal advice.