1031 Exchange

Definition

Section 1031 of the US Internal Revenue Code allows an investor to defer federal capital gains tax on the sale of investment real estate by reinvesting the proceeds into a 'like-kind' replacement property within a strict timeline: 45 days to identify replacement, 180 days to close. A qualified intermediary (QI) must hold the proceeds — the seller cannot take constructive receipt of the cash.

Worked example

An investor sells a stabilized rental for $800k with a $300k gain. Without a 1031, federal capital gains plus depreciation recapture could exceed $90k. A properly executed 1031 into a $900k replacement property defers the entire tax bill.

How DealIntel uses it

1031 eligibility is not a Kill List item but is surfaced on the Buy-and-Hold playbook as an exit-strategy consideration when the investor flags a long-hold intent.

Related terms

• Buy, Rehab, Rent, Refinance, Repeat · BRRRRA long-hold real estate strategy that recycles capital through a cash-out refinance after stabilization.
• Capitalization Rate · Cap RateThe annual unlevered return of an income property, expressed as a percentage of its value.

Matt Abadi is the founder of DealIntel. He leads the development of the platform's six-strategy underwriting engine, 25-point Kill List, and Monte-Carlo financial model — the institutional analysis stack DealIntel applies to every fix and flip deal. DealIntel was founded in 2025 with the central thesis that knowing when not to invest is the most valuable number on the page.