A properly structured 1031 like-kind exchange lets you sell an investment property and roll the entire proceeds, including the capital gain, into a Destin replacement property. No federal capital gains tax today. The deferred basis carries forward.
Two IRS deadlines control every 1031. Miss either and the exchange collapses into a fully taxable sale.
From close of relinquished property, you have 45 calendar days to identify up to 3 candidate replacement properties in writing to your qualified intermediary.
Total of 180 days from the relinquished sale to fully close on the replacement property. No extensions. Weekend and holiday days count.
Funds must go directly to a Qualified Intermediary at closing. If they pass through your hands or your bank account, the exchange is dead.
All three identified properties should be vetted and underwritten before day 45. I help clients pre-identify replacements in Destin, Miramar Beach, and 30A while their relinquished property is still pending.
If your replacement is worth less than what you sold (after costs) or you take on less debt, the difference is taxable boot. Trade equal or up.
Replacement property must be held for investment. IRS safe harbor: limit personal use to 14 days or 10% of rental days for the first 2 years.
Coordinating a 1031 in a tight market like Destin requires preparation before your relinquished property closes. My process:
This page is educational. I am not a CPA or tax attorney. 1031 exchanges have nuances that depend on your specific tax situation. Always confirm strategy with your tax advisor before initiating an exchange.
Let's start the replacement property search early. The earlier we identify candidates, the more leverage you have at the negotiating table.