1031 Exchange Advisor in Southern California

Who we serve: Orange County, Los Angeles and San Diego owners, from Irvine

The firm is based in Irvine and licensed in all 50 states. Within Southern California the sellers we hear from most are apartment owners in Los Angeles and Long Beach, owners of small retail and industrial buildings along the Orange County freeways, and San Diego landlords with a duplex or a fourplex they have held for decades. Each arrives with the same two questions, what the sale will cost and what the proceeds can become, and the answers depend on the city the property is in, the loan on it and the income the owner needs afterwards.

Meetings are by phone and video. The first call runs through the five questions on our 1031 exchange advisor page and adds the local ones below. Sellers who want the state-level picture first, the 13.3 percent rate, Form 593 and FTB 3840, should read our California sellers page; the state rules themselves are on the California exchange page.

Los Angeles sellers: the city transfer tax and Measure ULA come off the top before the exchange begins

Every California county charges a documentary transfer tax of $0.55 per $500 of consideration. The City of Los Angeles adds its own. According to the Los Angeles Office of Finance, the city's base tax is $2.25 per $500 of consideration or value, a rate of 0.45 percent, charged on all documents that convey real property within the city. Measure ULA imposes a further tax on top of it: for transactions closing after June 30, 2026, 4 percent where the value conveyed is over $5,400,000 and under $10,900,000, and 5.5 percent at $10,900,000 or more. The thresholds are adjusted each year by the chained consumer price index, and the Office of Finance's table puts the combined city rate at 4.45 percent and 5.95 percent in the two tiers.

A transfer tax is charged on the conveyance, not on the gain, so an exchange does not reduce it and it is paid out of the proceeds before the intermediary receives them. For a $12 million apartment sale in the city that is $714,000 of city tax alone, hypothetically and before the county's charge; run the figure against your own price with your CPA. The city schedules across the state, and how each treats an exchange, are in our closing guide to California city transfer taxes in a 1031 exchange. Outside the City of Los Angeles the picture is simpler: Orange County and San Diego County sellers pay the county tax, and whether their city adds anything is a question for that guide.

Rent-stabilised buildings: why the RSO and the Ellis Act push owners toward a sale

The Los Angeles Housing Department states that rental units covered by the city's Rent Stabilization Ordinance were generally built on or before October 1, 1978, that units built after July 15, 2007 to replace demolished RSO units may also be covered, and that the ordinance regulates rent increases and evictions across approximately 650,000 units. For an owner who bought such a building decades ago, the gap between regulated rent and the building's value as real estate is the reason the sale conversation starts.

The Ellis Act is the state law, Government Code section 7060, under which an owner may withdraw a building from the rental market. The Housing Department's Ellis page and its page on removal from the rental market set out the city's implementation under Los Angeles Municipal Code sections 151.22 to 151.28: a 120-day notice to tenants, or six months where the purpose is demolition for new construction; a mandatory one-year extension for a tenant who is 62 or older or disabled and has lived in the unit at least a year; a relocation assistance payment to each tenant within 15 days of the notice; and a tenant's right to move back for ten years after the withdrawal date, at the prior rent plus allowable increases if the unit is re-rented within five years. Those timelines run on the sale side, before the 45-day clock begins, and they are what we plan the exchange around. The exchange itself is explained in exiting a rent-controlled building through a 1031, and the broader case in the tired landlord's exit.

What the replacement looks like: a DST or a direct title security holding property outside the state

Most Southern California sellers we work with exchange into property outside California, for two reasons the state page explains: a California replacement is reassessed under Proposition 13, and the out-of-state DSTs we place hold stabilised property with management in place. A traditional DST replaces the building with an interest in a trust that already owns the property, financing and leases; a cash out DST covers a large loan payoff with a small share of the proceeds; a direct title security keeps a single property in your own LLC with fixed rent for the lease term. Which combination fits is the proposal's job.

Exchanging out of state starts the annual FTB 3840 filing, which tracks the deferred California gain until it is recognised; that is a filing, not a tax, until the trust's property is sold. And every one of these structures is a private placement: illiquid, without a public market, with distributions that can be reduced or stopped, and with the possibility of losing principal if the property sells for less than it cost. The risks sit beside the recommendation in every proposal, and DST illiquidity and exits explains what an exit can and cannot look like.

How the first conversation runs for a Southern California seller

We ask which city the property is in, because that fixes the transfer tax; whether it is under a rent stabilisation ordinance, because that fixes the sale timeline; what loan comes off at closing; where you live; the income you need; and who inherits. With those, an advisor can say which structures are open and send a proposal that shows the state and federal cost of a taxable sale, the city tax at closing, the equity and debt to replace, and the offerings available now. The proposal goes to your CPA before anything is signed, and the eight-step process takes it from there. The Orange County page covers our home market in more detail.

Questions Southern California sellers ask