1031 Exchange for Commercial Real Estate Investment (pt 1 of 2): What, Why, When, How, Benefits and Risks_Tim Vi Tran_Episode 17, Season 1

A plain-English walkthrough of how a 1031 Exchange lets commercial real estate investors defer capital gains taxes, keep more capital compounding, and reposition portfolios. We cover benefits, IRS timelines, identification rules, qualified intermediaries, and common pitfalls.

In Part 1 of this two-part series, Tim Vi Tran explains how a 1031 Exchange can unlock tax deferral while strengthening cash flow and long-term returns. You will learn what qualifies as like-kind property, how the 45-day identification and 180-day completion windows work, and the three identification methods: 3 Property Rule, 200% Rule, and 95% Exception. We discuss when and why to trade up, diversify across asset classes or geographies, and how to coordinate with a qualified intermediary. We also outline risks that trip up investors, and preview Part 2 on “boot,” depreciation recapture, and estate and state tax considerations.

• 1031 Exchange rules and timelines, qualified intermediaries, basis step-up, identification methods.

• Related strategies referenced: cost segregation and bonus depreciation, estate planning coordination.

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Key Takeaways

• 1031 Exchanges defer capital gains taxes when proceeds are reinvested into like-kind commercial property of equal or greater value.

• Core benefits: tax deferral, portfolio growth, diversification, and estate planning advantages through potential basis step-up.

• Non-negotiables: 45-day identification, 180-day completion, and use of a qualified intermediary.

• Identification options: 3 Property Rule, 200% Rule, 95% Exception.

• Risks include deadline pressure, intermediary and transaction costs, underperforming replacements, and possible policy changes.

• Professional guidance is essential given the financial stakes.

Who This Helps

Commercial real estate owners, exchangers, family offices, and advisors evaluating asset sales, portfolio upgrades, or geographic diversification.

What’s Next

Part 2 covers “boot,” depreciation recapture, estate tax and state variations, and a step-by-step execution checklist.

Considering a sale or portfolio repositioning with a 1031 Exchange as a lever? Contact The Ivy Group to map scenarios and timelines before you list.

Disclaimer:

General education only. Not tax, legal, or investment advice.

When you need to sell, buy, or lease, the Ivy Group is ready to help you reach your goals with more than 100 years of combined experience and expertise in real estate, investment, technology and engineering. Contact us with your next real estate needs.

Copyright ©️ 2025 by Tim Vi Tran, SIOR, CCIM. All rights reserved.