1031 exchange rules are essential to protecting your tax deferral. This guide explains eligibility and compliance so you can invest with confidence with Breakwater Exchange.
Not every real estate sale qualifies for a 1031 exchange, but many do, especially when structured correctly. At a high level, the IRS requires that both the property you sell (the relinquished property) and the one you acquire (the replacement property) be held for business use or investment purposes. This means rental properties, land held for appreciation, and commercial buildings often qualify, while personal residences or property held for resale typically do not.
The phrase “like-kind” is commonly misunderstood. It doesn’t mean you must exchange a retail building for another retail building. Rather, it means the two properties must be similar in nature or character, both being investment or business-use real estate. Properties must also be located within the U.S. to qualify, though some U.S. territories may be acceptable in limited cases. Multiple properties can be sold or acquired within the same exchange, adding flexibility for your reinvestment strategy.
Breakwater Exchange is here to help with any 1031 real estate exchange rule questions. Request a free proposal to make sure your transaction is aligned with 1031 compliance from day one.
To receive full tax deferral, you must follow a strict set of 1031 exchange rules and DST requirements enforced by the IRS. Here’s what to know before initiating a transaction:
No. Breakwater Exchange ensures all replacement properties meet IRS requirements by being held strictly for business or investment use. Personal residences are not eligible under 1031 rules.
Yes, and Breakwater Exchange helps you navigate the identification process with clarity. You may identify up to three properties under the 3-Property Rule or use the 200% or 95% rules for larger portfolios, depending on your goals.
Breakwater Exchange proactively manages your exchange timeline from day one. If the 180-day window is missed, the exchange fails, and taxes may be due. Our role is to help you avoid that entirely with tailored planning and vetted backup options.
DST marketplace · Preview
Three of twelve sample structures: asset class, leverage, minimum and hold. The sponsor, the distributions paid and the offering size are what marketplace access adds, after a short suitability call. Request access and the current list follows.
Ohio · Midwest
A long-leased facility financed so that all rent pays down the loan; built for sellers who must replace a large mortgage.
Shown with marketplace access
Sample offering: a hypothetical illustration of this structure type, not an actual or current offering.
Southern California infill · West
Smaller infill warehouses close to population centres, leased to several tenants on shorter terms.
Shown with marketplace access
Sample offering: a hypothetical illustration of this structure type, not an actual or current offering.
Six states · Midwest
A portfolio of free-standing stores leased to a national pharmacy chain, spread across several states.
Shown with marketplace access
Sample offering: a hypothetical illustration of this structure type, not an actual or current offering.
Sample offerings: hypothetical illustrations of structure types, not actual or current offerings. Photos are representative of each asset class. Current offerings are private placements for accredited investors, described by private placement memorandum.
Free 1031 proposal
Breakwater Exchange’s expert guidance helps you maximize returns while minimizing tax exposure, so you can invest with clarity and confidence.
