The case for the exchange
A 1031 defers recapture and capital gains tax, so 100% of your equity rolls into the next property instead of a chunk going to the IRS. Over several deals, that compounding is powerful.
The case for paying
Sometimes paying is smarter: if you want out of real estate, need liquidity, are in a low-income year, or can't find a suitable replacement within 45 days, forcing an exchange can cost more than the tax saved.
Run the numbers
Estimate the tax you'd defer with the 1031 calculator, then weigh it against the flexibility of paying now. The larger the deferred amount relative to your goals, the more the exchange favors you.
Frequently asked questions
Is a 1031 exchange always better?
No. It's best when you're staying in real estate and reinvesting fully. If you want liquidity or can't find a replacement in time, paying may be better.
Does a 1031 eliminate the tax?
No, it defers it. The gain carries into the replacement property.
Educational information and estimates only. Not tax advice. Tax rules change and vary by situation; consult a qualified tax professional before acting.