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1031 Exchange Blog

Advanced strategies, regulatory updates, and practical guidance from decades of facilitating tax-deferred exchanges.

Washington's Tax Exodus: How 1031 Exchanges, Out-of-State Trusts, and Life Insurance Create a Complete Asset Protection Strategy

Washington's tax landscape has shifted dramatically — a graduated capital gains tax, a new 9.9% millionaires' tax signed into law, and estate tax rates up to 35%. For real estate investors, the window for proactive planning is now. Here's how 1031 exchanges, out-of-state trusts, and life insurance work together as a coordinated defense.

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Investment Structures

The DST Backstop: Using a Delaware Statutory Trust to Rescue a Failing 1031 Exchange

Every 1031 exchange lives or dies by the 45-day identification deadline. The single most effective insurance policy against a failed exchange is a Delaware Statutory Trust identified as a backup replacement property — a real, closable, tax-compliant landing spot that can fund in days when your primary acquisition falls through. This post goes deep on the mechanics of the DST backstop and brings you current on recent Delaware law changes, the 721 UPREIT one-way door, and why debt structure is now the central due-diligence question.

August 18, 202614 min read

State Tax Issues

Crossing State Lines with a 1031 Exchange: Multistate Sourcing, the California and Oregon Clawback, and Selling the Replacement Property

A 1031 exchange is federal, but every state has its own view of what happens when a property crosses a state line. This article covers how real property gain is sourced among states, which states conform to § 1031 and which reach back to collect later, how the California (FTB Form 3840) and Oregon clawback regimes operate, and — through a detailed case study — what happens when a California exchanger moves equity into Washington and sells that Washington property years later.

August 10, 202616 min read

Exchange Mechanics

When Disaster Strikes Mid-Exchange: How Federal Disaster Declarations Extend Your 1031 Deadlines

The 45-day and 180-day deadlines in a 1031 exchange are statutory. But when a federally declared disaster intervenes, IRC §7508A and Revenue Procedure 2018-58 provide a mechanism to postpone those deadlines. This article explains who qualifies, how the two paths to relief work, and why acting before the declaration matters.

August 3, 202612 min read

Tax Rules & Compliance

What "Held For" Really Means in a 1031 Exchange: Intent, Holding Period, and the Line Between Investor and Dealer

Section 1031 does not prescribe a minimum holding period — it prescribes a purpose. This article unpacks the "held for" requirement, the landmark cases on intent, the dealer-vs.-investor line, and practical guideposts for how long to hold replacement property.

July 29, 202614 min read

Exchange Strategies

Seller Financing in a 1031 Exchange: How a Carryback Note Can Ride Along Without Blowing the Deferral

A seller-carryback note can quietly turn into taxable boot inside a 1031 exchange — or it can ride along with the deferral fully intact. This article explains why a promissory note collides with §1031, the constructive-receipt rule that requires the note to be payable to the qualified intermediary, the technique we use most often (the taxpayer buys the note back from the QI at face value so the exchange closes in full cash), the other ways to convert or retain the note, and the §453 installment-sale mechanics — including the §453(i) depreciation-recapture trap — that govern a note left outside the exchange.

July 14, 202612 min read

Exchange Strategies

Farms, Ranches, and Timberland in a 1031 Exchange: What Still Qualifies After the Tax Cuts and Jobs Act

Since the Tax Cuts and Jobs Act of 2017, a 1031 exchange defers tax only on real property — and a working farm is a bundle of very different assets. This article sorts a farm, ranch, or timberland sale into what still qualifies and what no longer does: the 2020 real-property regulations, the special rules for standing timber (Rev. Rul. 72-515, 78-163, and 76-253) and water rights (Rev. Rul. 55-749), the farmhouse's §121 exclusion under Rev. Proc. 2005-14, and the equipment and livestock that fell out of §1031 after tax reform.

July 8, 202615 min read

Exchange Strategies

Splitting Up a Partnership or LLC in a 1031 Exchange: Drop-and-Swap, Swap-and-Drop, and Assigning an Installment Note to the Exiting Partner

When co-owners of a partnership or LLC want to go different directions — some to defer, some to cash out — the partnership-interest barrier blocks a clean 1031 exchange. This article walks through the split-up toolkit: the drop-and-swap, the swap-and-drop, the Bolker and Magneson decisions that bless them, the Chase and Court Holding warnings and the step-transaction risk that can sink them, the Rev. Proc. 2002-22 tenancy-in-common guardrails, and the elegant move of assigning a partnership installment note to the departing partner so one owner defers under §1031 while another defers under §453.

July 6, 202615 min read

Exchange Strategies

Buying Out Your Partner: How Acquiring an LLC Interest Can Qualify as Replacement Property in a 1031 Exchange

A partnership interest cannot be exchanged under §1031 — yet under Revenue Ruling 99-6, buying out your co-owner so you become the sole member of the LLC is treated as acquiring the underlying real property. That means the buyout can qualify as replacement property for you, even though the same transaction is an ordinary taxable sale for the partner cashing out.

June 30, 202613 min read

Exchange Mechanics

Live in One Unit, Rent the Other: Combining the Section 121 Home-Sale Exclusion With a 1031 Exchange

A woman who owns a duplex — living in one unit, renting the other — wants to sell, minimize tax, and own her next property debt-free. Here is how to take the residence-side cash tax-free under §121, defer the rental-side gain under §1031, use the tax-free cash to offset mortgage boot, and build a clean audit trail with separate seller settlement statements.

June 29, 202612 min read

Exchange Rules

Can You 1031 Exchange a Boat? No — and Here Is Why Your Research Says Otherwise

We received a call from someone certain that a 1031 exchange could swap one boat for another. His research was not wrong — it was outdated. This article explains what the TCJA changed in 2018, why pre-2018 articles still dominate search results, and the one narrow boat-related scenario that actually does qualify.

June 26, 20268 min read

Exchange Mechanics

What Is Boot in a 1031 Exchange? Cash Boot, Mortgage Boot, and the Netting Rules That Determine Your Tax Bill

The word "boot" does not appear anywhere in the Internal Revenue Code — yet it is the single most important concept in determining whether your 1031 exchange is fully tax-deferred or a tax bill waiting to happen. This article explains cash boot, mortgage boot, the asymmetric netting rules, and why trading down in value is where most investors get surprised.

June 26, 202614 min read

Exchange Mechanics

When Your 1031 Exchange Fails: The Tax Bill, the Salvage Strategies, and What an Attorney-Led QI Does Differently

Most articles explain how to do a 1031 exchange correctly. This one is about what happens when it goes wrong — the tax consequences most investors underestimate, the salvage strategies that exist under §453 and §1033, and the structural choices made before the relinquished property closes that determine whether a failed exchange destroys your tax plan or merely dents it.

June 19, 202616 min read

Exchange Structures

Vacation Homes and 1031 Exchanges: The Safe-Harbor Rules That Separate a Valid Exchange from an IRS Disqualification

You rent out the Suncadia cabin most of the year and use it two weeks in summer. Can you 1031 it into a Whidbey Island beach house? Revenue Procedure 2008-16 says yes — if you follow a precise set of rules before and after the exchange. This article walks through the safe harbor, the personal-use trap, and what three Tax Court cases tell us about getting it right.

June 12, 202614 min read

Fund Safety

The Fidelity Bond Illusion: What Washington Consumers Should Know Before Choosing a 1031 Exchange Facilitator

Washington law gives exchange facilitators a choice: a fidelity bond that pays after a loss, or a qualified escrow that prevents the loss from occurring. Most facilitators choose the bond because it is easier. This article explains the difference, walks through the questions you should ask, and covers what happened when 450 investors learned the hard way that fund structure matters more than fund size.

June 9, 202612 min read

Exchange Structures

When Co-Owners Want Out: Splitting Trust Property Through 1031 Exchanges

A revocable trust holds three rental houses. The co-trustees are divorcing and want to go separate ways — she wants Arizona property, he wants to cash out one and keep one. Can they do a 1031 exchange? Yes, but the structure matters. This article walks through simultaneous swaps, deferred exchanges, drop-and-swap versus swap-and-drop, and the regulatory safe harbor that lets an attorney serve as your QI.

June 2, 202610 min read

State Tax Issues

Exchanging Out of California (or Oregon): The Holdback, the Clawback, and the Filing That Never Ends

California and Oregon both impose withholding at closing and an annual clawback filing when you exchange property out of state. This article covers Form 593, Form 3840, Oregon's ORS 316.738, who is responsible for the holdback, the annual reporting obligation, and how much each state will eventually tax when the replacement property is sold.

June 5, 202614 min read

Washington State Law

Three New Washington Housing Laws Taking Effect June 11 — What They Mean for 1031 Exchanges

Governor Ferguson signed a package of housing bills during the 2026 session. Three of them take effect on June 11 and directly affect the investment property landscape — commercial-to-residential conversions, condominium construction, and rural ADUs. Here is what each bill does, and why exchangers should care.

May 29, 20268 min read

Choosing a QI

What Your Qualified Intermediary Should Be Willing to Tell You

A woman called days before closing — confused about her exchange agreement, the FTB Form 593, how her funds would be held. Her QI would not answer any of it. This article covers the questions every QI should be willing to answer, the difference between processing paperwork and providing a professional service, and what the "I can't give legal advice" line really means.

May 26, 202612 min read

Exchange Mechanics

Identifying Replacement Property: The Rules, the Traps, and What Actually Counts

The 45-day identification deadline gets all the attention — but the real traps are in what you identify, how you describe it, and whether it holds up under the regulations. This article covers the three safe harbors, construction exchanges, fractional interests, DST identification strategy, and the 15% incidental personal property rule.

May 19, 202615 min read

Regulations & Compliance

Beyond Fee Simple: Non-Fee Interests and Statutory Exclusions in 1031 Exchanges

Most investors think of a 1031 exchange as selling one building and buying another. But the 2020 final regulations define "real property" far more broadly — leaseholds, easements, development rights, and options all qualify. At the same time, the regulations draw a hard line around interests that can never qualify, regardless of state law.

May 13, 202614 min read

Exchange Mechanics

Cash at Closing, the 45-Day Deadline, and What Happens When a 1031 Exchange Fails

When do you get your money back from the QI? It depends on what happened — and the rules are stricter than most investors realize. This article breaks down constructive receipt, the (g)(6) fund restrictions, failed exchange mechanics, and the precise timeline for fund release.

May 6, 202613 min read

Tax Rules & Compliance

Related Party 1031 Exchanges: What the Code Actually Says — and What It Means for Your Transaction

Can you do a 1031 exchange with a family member? The answer depends on which side of the transaction the related party is on. Selling to a related party can work with careful planning. Purchasing from one is a structural impossibility under §1031(f). This article breaks down why.

April 27, 202612 min read

Industry Cautionary Tale

When Your Qualified Intermediary Goes Bankrupt: The LandAmerica Story

In 2008, LandAmerica 1031 Exchange Services filed for bankruptcy, freezing $420 million in exchange funds from 450 customers. Every exchange failed. A first-person account from someone who was there — and the lessons that shaped how Olympic Exchange protects your funds today.

April 13, 202614 min read

Regulations

What Qualifies as "Real Property" After the 2020 Final Regulations?

The 2020 Final Regulations provide welcome clarity on what constitutes real property for Section 1031 purposes – and the definition is broader than many investors realize. From cell tower leaseholds to water rights, discover the opportunities.

February 28, 202612 min read

Tax Planning

Depreciation Recapture: The Hidden Tax in Your 1031 Exchange

You complete a textbook 1031 exchange, defer 100% of your capital gain, and still receive a tax bill. How? Section 1245 depreciation recapture. Learn how cost segregation and bonus depreciation interact with 1031 exchanges.

February 28, 20268 min read

9th Circuit

Contributing 1031 Exchange Property to an LLC: What the 9th Circuit Allows

Can you complete a 1031 exchange and then contribute the replacement property to your LLC? In the 9th Circuit, the answer is yes – thanks to Magneson v. Commissioner.

February 28, 20267 min read

Investment Structures

Delaware Statutory Trusts: A Passive 1031 Exchange Option

What is a DST? How does it work in a 1031 exchange? Can you convert a multi-member LLC into one? Learn about this increasingly popular replacement property option for investors seeking passive income and tax deferral.

March 25, 202610 min read

Tax Planning

Carryover Basis vs. Excess Basis: Why Your 1031 Replacement Property Needs Two Depreciation Schedules

When you buy a replacement property that costs more than what you sold, the basis has two distinct components — and they depreciate on completely different schedules. Getting this wrong is one of the most common 1031 tax return errors.

March 30, 20269 min read

Case Law

Non-Safe Harbor Reverse Improvement Exchanges: The Bartell Decision

What if your reverse improvement exchange doesn't fit the 180-day safe harbor? The Tax Court's Bartell decision rejected the IRS's restrictive benefits-and-burdens test, providing significant flexibility for taxpayers.

February 28, 202610 min read

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Jeff shares practical 1031 exchange strategies, regulatory updates, and planning tips. No fluff — just useful guidance from decades of experience.

1031 Exchange Blog

Washington's Tax Exodus: How 1031 Exchanges, Out-of-State Trusts, and Life Insurance Create a Complete Asset Protection Strategy

More Articles

The DST Backstop: Using a Delaware Statutory Trust to Rescue a Failing 1031 Exchange

Crossing State Lines with a 1031 Exchange: Multistate Sourcing, the California and Oregon Clawback, and Selling the Replacement Property

When Disaster Strikes Mid-Exchange: How Federal Disaster Declarations Extend Your 1031 Deadlines

What "Held For" Really Means in a 1031 Exchange: Intent, Holding Period, and the Line Between Investor and Dealer

Seller Financing in a 1031 Exchange: How a Carryback Note Can Ride Along Without Blowing the Deferral

Farms, Ranches, and Timberland in a 1031 Exchange: What Still Qualifies After the Tax Cuts and Jobs Act

Splitting Up a Partnership or LLC in a 1031 Exchange: Drop-and-Swap, Swap-and-Drop, and Assigning an Installment Note to the Exiting Partner

Buying Out Your Partner: How Acquiring an LLC Interest Can Qualify as Replacement Property in a 1031 Exchange

Live in One Unit, Rent the Other: Combining the Section 121 Home-Sale Exclusion With a 1031 Exchange

Can You 1031 Exchange a Boat? No — and Here Is Why Your Research Says Otherwise

What Is Boot in a 1031 Exchange? Cash Boot, Mortgage Boot, and the Netting Rules That Determine Your Tax Bill

When Your 1031 Exchange Fails: The Tax Bill, the Salvage Strategies, and What an Attorney-Led QI Does Differently

Vacation Homes and 1031 Exchanges: The Safe-Harbor Rules That Separate a Valid Exchange from an IRS Disqualification

The Fidelity Bond Illusion: What Washington Consumers Should Know Before Choosing a 1031 Exchange Facilitator

When Co-Owners Want Out: Splitting Trust Property Through 1031 Exchanges

Exchanging Out of California (or Oregon): The Holdback, the Clawback, and the Filing That Never Ends

Three New Washington Housing Laws Taking Effect June 11 — What They Mean for 1031 Exchanges

What Your Qualified Intermediary Should Be Willing to Tell You

Identifying Replacement Property: The Rules, the Traps, and What Actually Counts

Beyond Fee Simple: Non-Fee Interests and Statutory Exclusions in 1031 Exchanges

Cash at Closing, the 45-Day Deadline, and What Happens When a 1031 Exchange Fails

Related Party 1031 Exchanges: What the Code Actually Says — and What It Means for Your Transaction

When Your Qualified Intermediary Goes Bankrupt: The LandAmerica Story

What Qualifies as "Real Property" After the 2020 Final Regulations?

Depreciation Recapture: The Hidden Tax in Your 1031 Exchange

Contributing 1031 Exchange Property to an LLC: What the 9th Circuit Allows

Delaware Statutory Trusts: A Passive 1031 Exchange Option

Carryover Basis vs. Excess Basis: Why Your 1031 Replacement Property Needs Two Depreciation Schedules

Non-Safe Harbor Reverse Improvement Exchanges: The Bartell Decision

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