A 1031 works for all taxpayers because exchanges come in all sizes.
- Individuals, family investors, LLCs, partnerships, and corporations all use 1031 exchanges
- Not just for large commercial deals (60% of all exchanges involve properties under $1M)
- Supports everyday investors, not just institutions
A tax-deferred exchange boosts cash flow and investment. It is an efficient use of capital.
- Allows investors to reinvest all proceeds rather than losing a large portion to taxes upon sale
- Enables diversification, consolidation, or relocation into more productive property
- Increases reinvestment into construction, lending, property management, and local services
1031 exchanges maintain capital in the United States. This promotes domestic investment.
- Keeps capital circulating within the US market rather than moving overseas
- Strengthens local economies through repeated investment cycles
Improves market mobility by encouraging more transactions.
- Tax deferral reduces friction that can discourage selling
- Helps investors upgrade, reposition, or modernize properties – stimulating additional economic activity
1031 exchanges support retirement transitions and helps to maintain income-producing assets.
- Allows them to sell highly appreciated land and reinvest 100% into passive-income assets
- Supports continuity of income without the tax burden that would otherwise limit options
Taxes are deferred not eliminated. Taxes will be paid eventually.
- Deferred until the investor sells the replacement property without performing another exchange
- Depreciation is recaptured later, increasing future taxable income
- Provides timing flexibility, not tax forgiveness
The 1031 exchange industry drives job creation.
- Every exchange triggers a chain of economic activity
- Supports work for brokers, contractors, lenders, appraisers, title companies, inspectors, property managers, and more
- Without 1031, many transactions would not occur – reducing demand and shrinking these industries
Tax-deferred exchanges protect liquidity and preserve cash flow.
- Investors avoid draining savings, liquidating other assets, or taking on additional debt
- More capital remains available for improvements, maintenance, and reinvestment
- Strengthens financial stability for individuals and businesses while supporting market growth