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The 1031 Decision Map
Every situation an exchange can land in — property type, intent, timing, boot, entity, related parties, state — mapped to one answer: can you do the exchange?
Nothing you enter here is collected, stored or transmitted. There is no sign-up.
Four answers, not two
An exchange question almost never resolves to a clean yes or no, and the two answers in the middle are where the money is lost. Every situation here resolves to one of four.
Yes
The exchange works
Full deferral is available.
Partial
Yes — but part of it is taxable now
The exchange is valid. The arithmetic is the problem.
If
Yes — if you change something specific
Not available as structured. It becomes available, and the change has a deadline.
No
This is not a 1031
A workaround is not the answer here. There are real alternatives.
The expensive mistakes are the middle two, read as the first one.
Walk your exchange through it
Question 1 of 11
Where this tool stops
The question this tool will not answer for you is how much. Working that out means your actual basis, your depreciation history — including anything a cost segregation study reclassified years ago — the debt on both sides, and what your state does about gain it thinks is still owed to it. Those inputs are not something to guess at in a browser, and a number produced without them is worse than no number.
We run that model with clients before day 45, when the fixes are still available. Bring a live transaction and we will walk it with you.
Book a Strategy CallScenario reference
124 situations and what each one does to the answer. The middle column is the verdict; the one after it is where the planning move actually lives.
| Situation | Answer | Why / what to do | Authority |
|---|---|---|---|
| Raw land, farm or ranch landProperty | Yes | The paradigm case. Any US real property held for investment is like-kind to any other — apartment for raw land, farmland for an office building. | §1.1031(a)-1(b) |
| Rental house, apartment, retail, industrial, officeProperty | Yes | — | §1031(a)(1) |
| Condominium unitProperty | Yes | Fee interest in real property under state law. | §1.1031(a)-3 |
| Co-op apartment (stock in a housing co-op)Property | Yes | Expressly carved out of the rule that stock is not real property. Exchangeable for a fee interest in any real estate type. | §1.1031(a)-3(a)(5)(i) |
| Barns, silos, grain bins, fences, drainage tileProperty | Yes | Enumerated inherently permanent structures — but these are §1245 property for recapture. See the farm trap. | §1.1031(a)-3(a)(2)(ii)(C) |
| Growing crops, plants, standing timber — unseveredProperty | Yes | Unsevered natural products of land. | §1.1031(a)-3(a)(3) |
| The same, once severed or cutProperty | No | Natural products cease to be real property on severance. Timberland where the cut is already contracted carries a separate non-qualifying asset. | §1.1031(a)-3(a)(3) |
| Perpetual easementProperty | Yes | Like-kind to a fee. Conservation and stewardship easements qualify where state law treats them as real property. | Rev. Rul. 72-549 |
| Term (non-perpetual) easementProperty | If | Real property, but duration is treated as character rather than grade — a limited-duration interest may fail like-kind against a fee. Structure perpetual. No authority squarely on point. | By analogy to Wiechens, Fleming |
| Perpetual water rightsProperty | Yes | Where state law treats them as real property and there is no restriction as to priority, quantity or time. | Rev. Rul. 55-749; PLR 202309007 |
| Water rights limited in priority, quantity or durationProperty | No | State-law real property status is not enough. The leading case rejected water rights that WERE real property under state law but were not like-kind to farmland. Two separate hurdles. | Wiechens, 228 F. Supp. 2d 1080 (D. Ariz. 2002) |
| Mineral fee, working interest, perpetual or overriding royaltyProperty | Yes | The controlling line: an interest running to exhaustion of the deposit is real property. | Rev. Rul. 68-331; Rev. Rul. 73-428; Koch, 71 T.C. 54 |
| Carved-out production payment, quantity-limited oil paymentProperty | No | Treated as a financing, not a property interest. Read the instrument, not the brochure — royalty programs marketed as "1031-eligible" are often term or quantity-limited. | P.G. Lake, 356 U.S. 260; §636 |
| Air rights, transferable development rightsProperty | Yes | Air space above land is expressly real property; land development rights are expressly listed. | §1.1031(a)-3(a)(1),(a)(5)(i) |
| Leasehold with 30+ years remaining, including optionsProperty | Yes | Like-kind to a fee interest. | §1.1031(a)-1(c); Rev. Rul. 78-72 |
| Leasehold with 29 years remainingProperty | No | The clock runs from the exchange date, not lease inception. A 40-year lease signed 12 years ago is now 28. | §1.1031(a)-1(c) |
| A leasehold carved out of a fee you keepProperty | No | Creating and transferring an interest out of retained property is not an exchange. | Rev. Rul. 66-209 |
| Cell tower or billboard site held as an easementProperty | Yes | Cell towers and broadcasting towers are enumerated permanent structures. | §1.1031(a)-3(a)(2)(ii)(C) |
| The same site held as a lease or license bundleProperty | If | Very common and very costly. The owner’s interest in a lease cannot itself be exchanged, and the lessee’s leasehold is a different asset from the landowner’s fee. Convert to perpetual easements BEFORE going to market. | §1.1031(a)-3(a)(5) |
| Hotel — land, building, structural componentsProperty | Yes | Hotels and motels are enumerated permanent structures. | §1.1031(a)-3(a)(2)(ii)(C) |
| Hotel — FF&E, liquor license, franchise agreement, booking systemProperty | No | Routinely 10–20% of price. The worst asset class for slippage. Insist on a purchase price allocation before the LOI. | §1.1031(a)-3(a)(5)(ii) |
| Land-use permitProperty | Yes | A license or permit solely for the use, enjoyment or occupation of land, in the nature of a leasehold or easement. | §1.1031(a)-3(a)(5)(ii), Ex. 11 |
| Casino, gaming, cannabis or healthcare operating licenseProperty | No | A license to engage in or operate a business on real property is not real property. That allocation is boot, full stop. | §1.1031(a)-3(a)(5)(ii), Ex. 12 |
| Machinery, equipment, vehicles, inventory, artwork, cryptoProperty | No | Personal property has been out since 2018. There is no replacement provision. | §1031(a)(1) as amended by TCJA §13303 |
| Machinery integrated as a structural componentProperty | Yes | The final regs eliminated the proposed purpose-or-use test — classification turns on affixation and integration alone. A gas line feeding the building heating system is real property; the same line feeding an oven is not. | T.D. 9935; §1.1031(a)-3, Exs. 5,7,9 |
| Mobile or manufactured homeProperty | If | Turns entirely on state-law titling on the TRANSFER date. De-titled and affixed to owned land = real property. Titled as a motor vehicle = not. No post-2020 authority located. | §1.1031(a)-3(a)(1) |
| Manufactured housing communityProperty | Partial | Land, pads, roads and utilities are in. Park-owned homes still titled as chattel are out. | §1.1031(a)-3 |
| Solar arrayProperty | If | No direct authority. "Power generation and transmission facilities" are enumerated and the purpose-or-use test was removed, which is favorable for ground-mounted arrays on permanent foundations — but that is inference, not guidance. Get a memo. | Unresolved |
| Delaware Statutory Trust interestProperty | Yes | A grantor trust — you are treated as owning the underlying real estate directly. | Rev. Rul. 2004-86 |
| Tenant-in-common interestProperty | Yes | Co-ownership is expressly real property — UNLESS the arrangement is recharacterized as a partnership. | §1.1031(a)-3(a)(5)(i); Rev. Proc. 2002-22 |
| A "TIC" that files a Form 1065 and shares net cash flowProperty | No | It is a partnership, and every participant’s individual exchange fails. Watch for a manager with broad authority, joint marketing and leasing, and transfer restrictions. | §1.1031(a)-3(a)(5)(iii) |
| LLC or partnership interestProperty | No | The partnership owns the property; you own an interest in it. Post-TCJA the exclusion runs through the regulation, not the statute — §1031(a)(2)(D) is repealed text. | §1.1031(a)-3(a)(5)(iii) |
| LLC interest where the entity elected out of subchapter KProperty | Yes | The member is treated as owning each of the entity’s assets. The one statutory route through a partnership structure — common in oil and gas joint operating arrangements. | §1031(e); §761(a) |
| Single-member LLC interestProperty | Yes | Disregarded entity. Not an exception to the partnership rule — there is simply no partnership. | Reg. §301.7701-3 |
| REIT shares, stock, notes, bondsProperty | No | — | §1.1031(a)-3(a)(5)(iii) |
| OP units received in a §721 UPREIT contributionProperty | No | A different nonrecognition provision entirely, and a one-way door. The property leaves the 1031 chain permanently. | §721(a); §1.1031(a)-3(a)(5)(iii) |
| US property for foreign property (either direction)Location | No | Not like-kind. Full stop. | §1031(h) |
| Foreign property for foreign propertyLocation | Yes | §1031(h) bars only the cross-border pairing. A live and underused planning point for US persons with offshore portfolios. | §1031(h) |
| Puerto RicoLocation | No | Foreign for §1031 purposes — no coordination provision. By far the most commonly held territorial real estate, and the trap. | §7701(a)(9) |
| Guam, USVI, Northern MarianasLocation | If | Generally treated as domestic through separate coordination provisions — but that rests on legislative history rather than any regulation under §1031(h), and is conditioned on being subject to tax in both jurisdictions. Weakest-supported item in this material. | §§932, 935 |
| Rental held 6 years, rented throughoutIntent | Yes | — | §1031(a)(1) |
| Rental held 4 months, genuinely rented at marketIntent | Yes | No minimum holding period exists. The one- and two-year "rules" are folklore — one from a 1989 amendment never enacted, one from the related-party provision. | Bolker, 81 T.C. 782 |
| Fix-and-flipIntent | No | The entire business model is acquisition for resale. There is no investment intent. | §1031(a)(2) |
| Spec home built for saleIntent | No | Inventory of a construction trade or business. | §1031(a)(2) |
| Subdivided and marketed developer lotsIntent | No | Frequency and substantiality of sales plus development activity dominate. | §1031(a)(2) |
| Wholesaling — assigning the contract, never taking titleIntent | No | No real property interest is ever held; a contract right is a chose in action. | §1.1031(a)-3(a)(5)(iii) |
| Primary residenceIntent | No | §121 is the relief provision — $250K single / $500K married, on a 2-of-5-year test. | §121 |
| Duplex, owner occupies one sideIntent | Partial | §121 on the residence half, §1031 on the rental half — and the two halves’ proceeds must not cross. Any reasonable allocation works: appraisal, square footage, unit count. | Rev. Proc. 2005-14; Sayre |
| Home with a genuine home office or attached ranchIntent | Partial | Same split. §121 applies FIRST, and boot is counted only to the extent it exceeds the excluded gain — so a $250K exclusion lets you pull $250K of cash out of the exchange without recognizing gain. Genuinely favorable and routinely missed. | Rev. Proc. 2005-14 |
| Former home converted to rental, genuinely rented, then exchangedIntent | Yes | No safe harbor exists for this conversion. It is pure intent, and it is the most frequently challenged fact pattern in the area. | Goolsby vs. Reesink |
| Former home "converted" last month, listed but never rentedIntent | No | Nominal rental is not rental. Renting to a family member below market fails too. | §1031(a)(1) |
| Vacation home meeting the day-count safe harborIntent | Yes | 24 months of ownership, and in EACH preceding 12-month period: 14+ days rented at fair rental, personal use no more than the greater of 14 days or 10% of rental days. | Rev. Proc. 2008-16 |
| Vacation home never rented, held for appreciationIntent | No | Hope of appreciation is not investment intent. The taxpayers in the leading case also claimed mortgage interest consistent with personal residences. | Moore, T.C. Memo. 2007-134 |
| Replacement property you move into two weeks after closingIntent | No | Replacement-side intent is where the IRS actually wins. The losing taxpayers conditioned the purchase on selling their old home, did no research on whether the HOA allowed rentals, and advertised for two months. | Goolsby, T.C. Memo. 2010-64 |
| Replacement rented 8 months, then occupied after a financial reversalIntent | Yes | Nearly identical facts to the case above, opposite result — the taxpayers showed the property to prospective renters and documented genuine rental efforts. Documentation is the whole lesson. | Reesink, T.C. Memo. 2012-118 |
| Property with a built-in LOSSIntent | No | Loss is NEVER recognized in a 1031, and nonrecognition is mandatory, not elective. Sell it outright — a §1231 loss is fully ordinary. Screen every disposition for built-in loss before the exchange agreement is signed. | §1031(c); §1231(a)(2) |
| Buying equal or greater value, reinvesting all equity, replacing all debtBoot | Yes | The three-part test for full deferral. | §1031(b) |
| Cash taken at the relinquished closingBoot | Partial | Fully taxable, and the most avoidable boot there is. Borrow against the replacement AFTER closing instead. | §1031(b) |
| Net debt relief (mortgage boot)Boot | Partial | Taxable with no cash attached to pay it. The single largest cause of surprise 1031 bills. | §1.1031(b)-1(c) |
| Extra debt on the replacement to offset cash taken outBoot | No | It does not work. Net mortgage boot floors at zero and never goes negative to shelter cash. Over-leveraging only burns debt capacity. | §1.1031(d)-2, Ex. 2 (D) |
| Outside cash wired in to offset debt reliefBoot | Yes | This DOES work — cash paid into the exchange reduces net debt relief dollar for dollar. The cheapest fix in the area. | §1.1031(d)-2, Ex. 2 (E) |
| Personal property inside the 15% "incidental" bandBoot | Partial | Still fully taxable, usually at ordinary recapture rates. The 15% rule is a QI safe-harbor rule, not an eligibility rule. "You can bring 15% of personal property tax-free" is the single most common misstatement in circulation. | §1.1031(k)-1(g)(7)(iii) |
| Personal property OVER 15%Boot | If | A different and worse problem: the QI’s use of exchange funds to buy it can blow the safe harbor for the ENTIRE exchange. | §1.1031(k)-1(g)(7)(iii) |
| Seller-carryback note payable to youBoot | Partial | Boot at fair value in the year of the exchange even if no cash arrives. Fix: make the note payable to the QI, or report under the installment method. | §453(f)(6) |
| Loan fees, points, prepaid interest, lender reserves paid from exchange fundsBoot | Partial | Financing costs, not exchange expenses. Grey — no regulation squarely holds this — but the cure is trivial: wire outside cash for them and the argument disappears. | By negative implication from §1.1031(k)-1(g)(7)(ii) |
| Rent prorations and security deposits credited to the buyerBoot | Partial | No direct authority; practitioner consensus is boot. The regulation lists prorated TAXES as a transactional item but is silent on rents and deposits. Fund them with outside cash rather than netting against price. | Grey area |
| Commissions, title, escrow, transfer taxes, QI feeBoot | Yes | Exchange expenses — they reduce boot and increase replacement basis. Do NOT deduct them twice: using them on both Form 8824 line 15 and line 18 when they already came out of gross proceeds is the most common preparation error. | Rev. Rul. 72-456; §1.1031(k)-1(g)(7)(ii) |
| Funds left with the QI at day 181Boot | Partial | Fully taxable that year. Identify a backup property specifically sized to absorb the residual. | §1.1031(k)-1(g)(6)(iii) |
| Refinancing the relinquished property shortly before closingBoot | If | No bright-line rule, but this is the textbook IRS target. Refinancing the REPLACEMENT after the exchange fully closes is far safer sequencing. | Judicial doctrine |
| Cost-segregated or bonus-depreciated property into a §1245-light replacementBoot | Partial | The §1245 trap. A 100%-bonused property has no remaining §1245 basis, so ordinary-income exposure is at its maximum exactly when the client feels most tax-advantaged. Pull the cost seg study before identification. | §1245(b)(4); §1.1245-4(d) |
| §1245-loaded farm exchanged into bare landBoot | Partial | Grain bins, tile, hog barns and dairy parlors are real property for 1031 and §1245 property for depreciation. The recapture triggers as ordinary income even though the exchange is perfectly valid. | §1245(b)(4) |
| Missed day 45Timing | No | Nothing can be added, removed or changed after midnight. There is no cure. Funds release at day 46 and the exchange is failed, not partial. | §1.1031(k)-1(c)(6) |
| Identified a fourth property "just in case"Timing | No | Over-identification fails the ENTIRE identification, not just the excess — unless you actually acquire 95% of the total identified value, which is usually impossible. Use the 3-property rule by default. | §1.1031(k)-1(c)(4) |
| Identification delivered to your own CPA, attorney or brokerTiming | No | They are disqualified persons. The identification is void. Deliver to the QI or the actual seller. | §1.1031(k)-1(c)(2),(k) |
| Identified five DST interests under the 200% ruleTiming | If | The 200% test uses fair market value GROSS OF DEBT, not the equity invested — five DSTs can breach 200% while appearing well inside it. It is measured at the end of day 45, not at contract price. | §1.1031(k)-1(c)(4)(i)(B) |
| Sale closed Oct 18 – Dec 31, return filed without an extensionTiming | No | The tax-return trap. The exchange period ends on the EARLIER of 180 days or the return due date INCLUDING EXTENSIONS. The fix is free: file the extension, and do not file the return until the exchange closes. | §1031(a)(3)(B) |
| Day 180 falls on a Sunday or a holidayTiming | No | No weekend or holiday relief — the 45th and 180th days are calendar days. Treat the last business day before day 178 as the real deadline; the title company, recorder and wire desk are closed. Hedge: this is universal QI-industry and practitioner practice, but no published ruling or case squarely holding it was located. Plan as though there is no relief; do not represent the point as settled authority. | §1.1031(k)-1(b)(2) |
| Two relinquished properties closing in different monthsTiming | If | Both clocks run from the transfer of the FIRST property. The March closing started the clock for the whole exchange. | §1.1031(k)-1(b)(2)(iii) |
| Federally declared disaster affecting the dealTiming | If | A FEMA declaration alone does nothing — the IRS must issue a notice. Check the ALTERNATIVE rule: available to any taxpayer if the relinquished property transferred on or before the disaster date and an enumerated reason applies (including a lender declining to fund, or a title company unable to issue). | Rev. Proc. 2018-58, §17 |
| Proceeds came to you instead of the QIProcess | No | Actual receipt is irreversible. There is no retroactive fix. | §1.1031(k)-1(f) |
| QI assignment executed but never noticed to the other partiesProcess | If | Written notice to all parties on or before the transfer is a condition of the safe harbor. Put the recital in the closing package and get signatures. | §1.1031(k)-1(g)(4)(v) |
| Your CPA’s or attorney’s affiliated exchange company as QIProcess | No | The two-year agent lookback, plus a 10% ownership threshold — not 50%, which is the number advisors reflexively apply. | §1.1031(k)-1(k) |
| Closing attorney as QI, who did other work for youProcess | No | The carve-out is only for services performed WITH RESPECT TO §1031 exchanges. Very common in the Southeast, and fatal. | §1.1031(k)-1(k)(2) |
| Title company subsidiary as QIProcess | Yes | Routine title and escrow work is expressly carved out. Just confirm the QI entity is not 10%-owned by a disqualified agent. | §1.1031(k)-1(k)(2) |
| Exchange funds held in the QI’s commingled operating accountProcess | If | No federal licensing, oversight or insurance. In bankruptcy the funds are the QI’s property and you are an unsecured creditor — and the safe-harbor restrictions LOCK YOU IN. Insist on a segregated qualified escrow at a rated bank, in the taxpayer’s name and TIN, with dual authorization. | §1.1031(k)-1(g)(3); Rev. Proc. 2010-14 |
| Lender requires a new two-member LLC to take titleEntity | If | Different taxpayer. Fix: a disregarded single-member LLC with an independent DIRECTOR, not a second MEMBER. Raise it at the term sheet, not at closing. | Reg. §301.7701-3 |
| Husband sells solo, couple takes title as JTWROS in a common-law stateEntity | Partial | Half the exchange fails. Community-property states are treated differently. | Rev. Proc. 2002-69 |
| Exchanger dies after the relinquished closingEntity | Yes | The estate may — and should — complete it. The gain is already triggered; letting it lapse just recognizes it with no step-up available. The clocks do not stop for death. | Rev. Rul. 64-161 |
| Drop-and-swap: TIC interests distributed BEFORE the property is marketedEntity | If | The defensible sequence. Watch the seven-year mixing-bowl rules, hot assets, disguised sale and debt-shift gain on distribution. | Bolker; Magneson |
| Drop-and-swap: distribution AFTER the partnership signed the PSAEntity | No | The single most damaging fact — the partnership was the true seller because it signed the agreement and retained benefits and burdens until closing. This is the case the taxpayer lost. | Appeal of Pau (Cal. OTA 2019); Court Holding |
| Drop-and-swap with a final Form 1065 reporting the saleEntity | No | Reporting inconsistency destroys the TIC story faster than any substantive argument. | Court Holding |
| Same-day drop-and-swapEntity | If | A June 2025 New York tribunal approved one, holding §1031 imposes no minimum holding period. Genuinely useful persuasive authority — but a state administrative decision binding on no federal court. Treating it as a federal green light is malpractice. | In re Hadar, N.Y. Tax App. Trib. (June 12, 2025) |
| Direct swap with a related party, both hold two yearsRelated | If | Works. But a put, buy-back right or anything that substantially diminishes risk of loss SUSPENDS the two-year clock — clients think they have cleared it when they have not. | §1031(f)(1); §1031(g) |
| Buying replacement FROM a related party who takes cashRelated | No | Taxable immediately and in full. A QI in the middle does NOT cure it — all three circuits treat the intermediary as transparent. | Rev. Rul. 2002-83; §1031(f)(4) |
| "The related party paid tax, so there is no avoidance"Related | No | Recognition is not enough if net operating losses absorbed it. The related party must actually bear comparable tax. | Teruya Brothers, 580 F.3d 1038 (9th Cir. 2009) |
| Related party does its OWN §1031 exchange and does not cash outRelated | If | The narrow path that works. Both parties represent they will hold two years; boot to the related party should not exceed its realized gain. | LTR 200440002; LTR 200616005 |
| Selling TO a related party, buying from an unrelated sellerRelated | If | A different and generally more favorable analysis — no swap and no basis shift. But a related buyer who immediately resells for cash invites attack. | LTR 200709036 |
| Skipping the Form 8824 filings for the two following yearsRelated | No | Required even when nothing happened. It routinely is not filed — the preparer changes, or the client considers the exchange done. That is a return-position defect. | Form 8824, Part II |
| Reverse exchange within the safe harborStructure | If | Written arrangement within 5 business days, relinquished identified within 45 days, everything done within 180 days of the parking. Hard stop — no return-due-date interplay. | Rev. Proc. 2000-37 |
| Reverse exchange — the lender problemStructure | If | The borrower is the accommodator’s special-purpose entity. Institutional, agency and CMBS lenders resist it. Permitted mitigants: you guarantee the loan, you lend the funds, the LLC interests get pledged. Check for double transfer tax and California Prop 13 reassessment. | Rev. Proc. 2000-37, §4.03 |
| Parking longer than 180 daysStructure | If | A 2016 Tax Court case allowed a 17-month park; the IRS formally NONACQUIESCED in 2017 and that position still stands. Expect litigation, disclose on Form 8275, evaluate penalty exposure. | Estate of Bartell, 147 T.C. 140; AOD 2017-06 |
| Improvement exchange — materials on site but not installed on day 180Structure | No | Goods, not real property. Same for contractor deposits, prepaid draws, retainage and architect fees for work not yet embodied in the structure. | §1.1031(k)-1(e)(4) |
| Improvement exchange — construction under-spend by day 180Structure | Partial | Unspent exchange proceeds are cash boot. Build the schedule backward from day 178 and identify a second property by day 45 to absorb the residual. | §1.1031(k)-1(e)(3) |
| Building on land you already ownStructure | No | You are buying goods and services on your own land. Conveying it to an accommodator within 180 days does not fix it. | DeCleene, 115 T.C. 457; Rev. Proc. 2004-51 |
| Ground-lease workaround — land in a DIFFERENT taxpayerStructure | If | A 30+ year leasehold is like-kind to a fee. Rests on private rulings, carries a related-party overlay, and the leasehold at market rent has near-zero standalone value — replacement value must come from the improvements. Not safe-harbored. | PLRs 200251008, 200329021, 201408019 |
| DST that hits distress and converts to a "springing LLC"Structure | No | Preserves the asset and TERMINATES §1031 eligibility going forward — you now hold a partnership interest. Clients are rarely told this at subscription. | Rev. Rul. 2004-86; §301.7701-4(c) |
| DST → §721 UPREIT, promised at subscriptionStructure | No | The two-step must be genuinely sequential. A pre-arranged plan invites step-transaction recharacterization of the ORIGINAL exchange. | §721; step-transaction doctrine |
| California relinquished property, out-of-state replacementState | If | Form FTB 3840 EVERY year until the gain is recognized. Source character survives the exchange and survives your move out of state. Miss it and the FTB may ESTIMATE your income and assess. | Cal. R&TC §18032 |
| Oregon relinquished property, out-of-state replacementState | If | Statutory add-back plus Form OR-24 annually. Its statute also reaches §1033 involuntary conversions — practitioners routinely assume it does not. | ORS 316.738 |
| Montana or Massachusetts relinquished propertyState | If | Source character retained, asserted on federal recognition. No annual form — which is worse, because nothing prompts anyone and 20 years later the records are gone. | Mont. Admin. R. 42.2.308; 830 CMR 62.5A.1(3)(d) |
| Nonresident seller — withholding at closingState | If | Every withholding state has a §1031 exemption and every one requires you to CLAIM it in advance. Maryland and West Virginia 21 days, Maine two weeks, Vermont a Commissioner’s Certificate. Miss it and your exchange funds are short. | State law |
| Hawaii sale with ANY recognized gainState | No | If any gain is recognized the exemption certificate is unavailable, and withholding applies to the FULL amount realized — not just the boot. | HRS §235-68 |
| Failed exchange in California or South CarolinaState | Partial | The QI withholds out of exchange funds without asking. | Cal. R&TC §18662; SC Rev. Rul. 09-13 |
| Pennsylvania exchange completed before 2023State | Partial | Pennsylvania did not recognize §1031 for personal income tax until Jan. 1, 2023. Pre-2023 exchanges are permanently divergent — the PA basis is COST, not the federal substituted basis, and must be tracked separately forever. | Act 53 of 2022 |
| Transfer, excise and recordation taxesState | No | §1031 never waives them. Pennsylvania’s realty transfer tax has no exemption for the QI leg. Reverse exchanges can trigger transfer tax TWICE. Vermont’s land gains tax applies to land held under six years. | State law |
| No-income-tax state (FL, TX, NV, WY, TN, SD, AK, NH)State | Partial | The exchange still matters: the federal number is larger anyway, exchanging INTO a taxing state imports you into its regime forever, and the SOURCE state governs the relinquished leg — a Texas resident selling California property faces California withholding and clawback. | §1411; §1(h)(1)(E) |
| Condemnation or casualtyAlternative | If | Use §1033 instead. Three years for condemned real property (with the like-kind standard), no QI required, and the clock runs from the CLOSE of the first tax year in which gain is realized. Do not reflexively hire a QI. | §1033(g) |
| Opportunity Zone investment made in 2026Alternative | No | 2026 is a dead zone. Gain invested before Dec. 31, 2026 is included in income on that date anyway and cannot be re-deferred. The rolling 5-year deferral and the step-ups apply only from Jan. 1, 2027. | §1400Z-2; Notice 2026-40 |
| Installment sale instead of an exchangeAlternative | Partial | Depreciation recapture is recognized IN FULL in the year of sale regardless of payments. And the note is income in respect of a decedent — no step-up. For an older client that is usually decisive against it. | §453(i); §691 |
| Monetized installment saleAlternative | If | Not currently a listed transaction, so no Form 8886 obligation today. But: on the Dirty Dozen since 2021, proposed listing regulations pending since August 2023, and a DOJ promoter injunction suit filed April 2025 over ~386 transactions totaling $968M+. | REG-109348-22 |
| Charitable remainder trust with a mortgaged propertyAlternative | No | Debt-encumbered property produces UBTI subject to a 100% excise tax, and can be self-dealing if the donor remains liable. Pay the mortgage off before contributing — and note the CRT is irrevocable. | §664(c)(2); §514 |
| "Deferred Sales Trust"Alternative | If | Disambiguate in writing. A DELAWARE Statutory Trust is a legitimate 1031 vehicle with a favorable ruling. A DEFERRED SALES Trust is a promoted §453 structure with no favorable published ruling, substantial fees, and a deferral only as good as an unsecured note from a trust the client does not control. | No favorable authority |
| Pay the tax, buy outside the exchange, run a cost segregation studyAlternative | If | In 2026 this frequently wins. A $3.3M straight purchase with a 22% study yields ~$580K of immediate deduction; the same property as 1031 replacement yields ~$109K, because carryover basis is not bonus-eligible. Works cleanly only for a real estate professional or someone with enough passive income. | §168(k)(6) as amended by OBBBA |
| Hold until deathAlternative | Yes | The step-up wipes out the entire deferred chain INCLUDING depreciation recapture — the point clients disbelieve, and the largest quantitative argument for holding. With the exemption permanently at $15M/$30M, "swap till you drop" is cleaner than at any point in the last decade. | §1014; Rev. Proc. 2025-32 |
Showing 124 of 124 scenarios
Fact currency
Verified 11 August 2026. Section 1031 was not amended by the One Big Beautiful Bill Act (P.L. 119-21, July 2025). The operative rulebook is still the 1991 deferred-exchange regulations plus T.D. 9935 (2020).
Please read
Educational material, not tax or legal advice, and not a recommendation to enter any transaction. This tool applies general rules to the facts you enter; every exchange turns on its own facts, and the state layer alone can reverse the answer. Several points it covers are genuinely unsettled. Nothing here substitutes for a modeled after-tax analysis and advice from your own tax counsel before you commit.