1031 Exchange Experts

At VKREA Commercial, we understand the importance of preserving equity and maximizing investment potential—especially when transitioning between multifamily assets. A 1031 Exchange is a powerful tax-deferral strategy that allows investors to sell one income-producing property and reinvest the proceeds into another like-kind property, deferring capital gains taxes in the process.

Whether you're looking to scale into larger multifamily buildings, diversify into more passive investments, or reposition your portfolio geographically, VKREA Commercial provides the guidance and access needed to execute a seamless 1031 Exchange. Backed by a deep inventory of multifamily opportunities across Southern California and a collaborative advisory model, our team ensures you not only meet IRS exchange requirements—but also make smart, strategic acquisitions aligned with your long-term investment goals.

What Is a 1031 Exchange?

A 1031 exchange allows real estate investors to defer capital gains taxes by reinvesting the proceeds from the sale of one investment property—commonly called the “relinquished property”—into another qualifying investment property, known as the “replacement property.” Named after Section 1031 of the Internal Revenue Code, this tax-deferral strategy is widely used to grow and consolidate real estate holdings without an immediate tax burden.

To successfully complete a 1031 exchange, investors must follow strict IRS guidelines and adhere to critical deadlines. Working with a seasoned commercial real estate advisor who understands these regulations is essential to ensuring a smooth and compliant transaction.

1031 Exchange Timelime

1. Establish a Plan

2. List and Sell Your Investment Property

Start by consulting your real estate broker, CPA, and legal or tax advisor to understand the 1031 exchange rules and timelines. At this stage, you’ll also identify a Qualified Intermediary (QI), who will hold the proceeds from your sale and facilitate the transaction in compliance with IRS regulations.

2. List and Sell Your Investment Property

Your current property (known as the “relinquished” or “down leg”) is listed and marketed. With VKREA’s deep investor network and strategic marketing platform, we help ensure a competitive sale while keeping the exchange deadlines in mind.

3. Identify a Replacement Property

2. List and Sell Your Investment Property

3. Identify a Replacement Property

Once your original asset is sold, you have 45 calendar days to formally identify potential “replacement” properties. Up to three properties can be named, and they must meet IRS guidelines. VKREA advisors assist in sourcing high-quality multifamily opportunities aligned with your investment goals.

4. Acquire the Replacement Asset

You must close on at least one of the identified properties within 180 days from the date of selling your original property. Our experienced team works closely with the QI, lender, and escrow to ensure your purchase is timely, seamless, and meets all exchange requirements.

5. Finalize and File

4. Acquire the Replacement Asset

Once the new property is purchased, your tax advisor will ensure the exchange is documented properly on your annual return. The deferred taxes remain in effect as long as the investment is held, offering continued capital growth potential.

6. Ongoing Portfolio Strategy

4. Acquire the Replacement Asset

6. Ongoing Portfolio Strategy

Even after the exchange, VKREA helps you monitor performance and uncover new opportunities, ensuring your portfolio continues to grow strategically.

Is a 1031 Exchange the Right Strategy for You?

Partnering with an advisor

You’re a Seller of Investment Property — Now What?

A 1031 exchange can be a powerful tool for real estate investors seeking to defer capital gains taxes, but it involves specific rules and strict timelines. Partnering with seasoned professionals is essential to ensure compliance and maximize your benefits. At VKREA Commercial, our advisors leverage deep market experience to guide you through every step of the exchange process.

You’re a Seller of Investment Property — Now What?

Option 1: Sell and Pay Taxes

Federal Capital Gains Tax: Up to 20%
State Capital Gains Tax: 0–13.3%
Depreciation Recapture: 25%
Net Investment Income Tax: 3.8%

Option 2: Defer Taxes via 1031 Exchange

Proceeds are transferred to a Qualified Intermediary (QI)
Exchange into either:
Active Management Real Estate (“Hands-On Approach”)
Passive Investment Structure such as a Delaware Statutory Trust (DST)
(Available to accredited investors only)

What is a Delaware Statutory Trust (DST)

A Delaware Statutory Trust (DST) is a legally recognized trust structure used primarily for real estate investment. It allows multiple investors to own fractional interests in large, institutional-grade properties — typically commercial or multifamily assets — without the responsibilities of direct property management.

Key Features of a DST:

Used in 1031 Exchanges: DSTs are eligible replacement properties for 1031 tax-deferred exchanges, making them attractive to investors looking to defer capital gains taxes.
Passive Investment: Investors receive regular distributions (if any) but do not make day-to-day decisions about the property.
Limited Liability: Investors are typically only liable up to the amount they invest.
Pre-Packaged Investments: Properties are usually already acquired and managed by a professional sponsor before investors buy in.
For Accredited Investors Only: You must meet income or net worth thresholds (typically $1M net worth or $200K–$300K annual income) to invest.

Example Use Case:

You sell a multifamily building, triggering capital gains. Instead of buying another property to actively manage, you use your 1031 exchange funds to invest in a DST that owns a professionally managed Amazon distribution center or a portfolio of apartment complexes.

It’s essentially a way to reinvest real estate profits passively, tax-deferred, and without the management headaches.

The information and materials presented on this website have been obtained from sources VKREA Commercial considers reliable; however, no representation or warranty, express or implied, is made regarding their accuracy or completeness. This content is provided strictly for general informational and illustrative purposes and should not be interpreted as investment, legal, accounting, or tax advice. VKREA Commercial, its agents, brokers, and affiliated professionals do not offer guidance on 1031 exchanges or related tax matters. Individuals considering a 1031 exchange or any investment strategy are strongly advised to consult with qualified legal, tax, and financial advisors. No content on this site should be used as the basis for individual investment decisions without independent professional consultation.

1031 Exchange Experts

What Is a 1031 Exchange?

1031 Exchange Timelime

1. Establish a Plan

2. List and Sell Your Investment Property

2. List and Sell Your Investment Property

2. List and Sell Your Investment Property

2. List and Sell Your Investment Property

2. List and Sell Your Investment Property

3. Identify a Replacement Property

2. List and Sell Your Investment Property

3. Identify a Replacement Property

4. Acquire the Replacement Asset

4. Acquire the Replacement Asset

4. Acquire the Replacement Asset

5. Finalize and File

4. Acquire the Replacement Asset

4. Acquire the Replacement Asset

6. Ongoing Portfolio Strategy

4. Acquire the Replacement Asset

6. Ongoing Portfolio Strategy

Is a 1031 Exchange the Right Strategy for You?

Partnering with an advisor

You’re a Seller of Investment Property — Now What?

You’re a Seller of Investment Property — Now What?

You’re a Seller of Investment Property — Now What?

You’re a Seller of Investment Property — Now What?

You’re a Seller of Investment Property — Now What?

WE'RE HERE FOR YOU

What is a Delaware Statutory Trust (DST)

Key Features of a DST:

Example Use Case:

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