Three-property rule
Identify up to three replacement properties, regardless of aggregate fair market value.
Often the clearest route for a focused acquisition mandate.
1031 exchange advisory · nationwide
Protect the timeline. Improve the next investment.
A 1031 exchange can defer gain when qualifying real estate is exchanged for qualifying replacement real estate. Stonecliff helps investors define the mandate, source options, underwrite risk, and execute within a deadline that does not move.
The clock starts at closingEngage a qualified intermediary before the relinquished-property sale closes. Receiving or controlling the proceeds can disqualify the exchange.
The core idea
Tax deferral is a structure—not the investment thesis.
Section 1031 generally applies to real property held for investment or productive use in a trade or business—not property held primarily for sale. Replacement property does not need to match the asset type: an investor may exchange among broad categories of U.S. real property when the facts qualify.
The exchange defers gain; it does not erase it. Basis generally carries into the replacement property, adjusted for cash, liabilities, and recognized gain. Cash or other non-like-kind value received—often called boot—may create current taxable gain.
Stonecliff provides real estate brokerage and investment advisory services. Your CPA, attorney, and qualified intermediary should approve the tax and legal structure.
01 · RelinquishSell the investment property
The sale is assigned to a qualified intermediary before closing.
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02 · HoldQI holds the proceeds
The investor avoids receiving or controlling the exchange funds.
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03 · ReplaceAcquire qualifying real estate
Identified property is received within the exchange period.
The exchange clock
Four moments determine the strategy.
The 45-day identification period and 180-day exchange period run concurrently. The receipt deadline is the earlier of day 180 or the due date of the tax return for the transfer year, including extensions.
Before day 0Build the team
Select the QI, involve tax and legal advisers, and define criteria.
Day 0Sale closes
The exchange period begins when the transferred property closes.
By day 45Identify in writing
Clearly describe replacement property and deliver the signed identification.
By day 180*Receive the property
Complete the acquisition and coordinate funds through the QI.
Identification framework
More options require more discipline.
Most exchange buyers use one of three federal identification tests. Confirm the exact identification with qualified advisers.
Two-hundred-percent rule
Identify any number if combined fair market value does not exceed 200% of the relinquished property value.
Useful when comparing several smaller assets.
Ninety-five-percent exception
If the other limits are exceeded, acquire at least 95% of the value of everything identified.
A demanding exception—not a casual fallback.
Stonecliff’s role
Brokerage built around the exchange mandate.
We focus on the real-estate decisions inside the structure: what to buy, what risks are acceptable, and how to keep diligence moving.
Translate goals into criteria
Target equity, debt, geography, tenant profile, lease term, yield, and closing constraints.
Build a credible replacement set
Screen on-market and relationship-driven opportunities, then maintain backups.
Compare risk behind the cap rate
Evaluate tenant, lease, real estate fundamentals, and exit liquidity.
Coordinate toward closing
Manage offers, diligence, financing, title, and communication with the QI and advisers.
DecisionWhat we testWhy it matters
TenantCredit, concept durability, guaranty, operating performanceIncome strength varies even among familiar brands.
LeaseTerm, options, increases, expenses, assignment languageThe lease defines cash flow and the exit story.
Real estateAccess, visibility, demographics, market rent, alternate useStrong real estate protects value beyond the tenancy.
ExecutionFinancing, diligence, title, certainty, backup propertiesA return is irrelevant if the deal cannot close in time.
Frequently asked
What investors should clarify early.
Every exchange is fact-specific. These answers are a practical starting point, not tax or legal advice.
Does “like-kind” mean the same property type?
Not necessarily. Qualifying U.S. real property can generally be exchanged for other qualifying U.S. real property when both are held for investment or business use.
Can I identify after day 45?
Generally no. Replacement property must be identified in writing by the end of the 45-day period unless already received.
Do I need to reinvest every dollar?
Cash, non-like-kind property, and debt changes can cause recognized gain. Ask your tax adviser to model the required equity and debt.
Can a primary residence qualify?
Personal-use property generally does not qualify. Mixed-use, former rental, and vacation-home facts require specific analysis.
What about a reverse exchange?
A reverse structure may be possible when replacement property must be acquired first. It requires specialized planning before acquisition.
Can Stonecliff serve as the QI?
No. Stonecliff is the real estate broker and acquisition adviser. We coordinate with the client’s independent QI, attorney, accountant, lender, and title team.
Primary references: IRS Like-Kind Exchange Tax Tips, 2025 Instructions for Form 8824, and 26 CFR §1.1031(k)-1.
Planning an exchange?
Start the replacement-property conversation before the sale closes.
Share the expected closing date, equity range, financing plan, and investment criteria. We’ll help turn the constraints into an executable acquisition strategy.
*The exchange deadline is generally the earlier of 180 days after transfer or the due date of the taxpayer’s return, including extensions. Stonecliff Real Estate is not a law firm, accounting firm, or qualified intermediary and does not provide legal or tax advice. Consult independent qualified professionals regarding your transaction.