Investment property planning · Denver metro
Selling an investment property? Plan the next move before you close.
A 1031 exchange may allow a qualifying property owner to defer capital gains taxes while moving from one investment property to another. The right starting point is a clear view of your property, your goals and the timing.
McFall Draheim Group · Coldwell Banker Realty · Updated October 2026
Start with the reason
An exchange is a tool. The investment decision comes first.
A 1031 exchange can help preserve capital for reinvestment, but that alone doesn’t make a replacement property a good fit. We start with what you want to change about your portfolio, then consider the real estate choices and their trade-offs.
01 / REPOSITION
Move into a different property.
Consider selling a long-held rental and acquiring another investment that better aligns with your cash flow, location or ownership goals.
02 / SIMPLIFY
Reconsider the management work.
For some owners, fewer properties or a different property type may reduce day-to-day demands. Compare those advantages with costs, financing and risk.
03 / DIVERSIFY
Spread or consolidate exposure.
Depending on your strategy, selling one property to buy several, or combining several properties into one, may merit evaluation.
A timeline that needs preparation
The two deadlines every exchanger needs to know.
In a common delayed exchange, the clock begins when the relinquished property transfers. Planning before closing matters because the deadlines are measured in calendar days.
Set up the exchange.
Before the sale closes, engage an eligible qualified intermediary and coordinate the required exchange documents and sale proceeds.
Identify replacement property.
Formally identify qualifying replacement property in writing under the applicable IRS identification rules.
Complete the purchase.
Acquire the replacement property within 180 days or by the applicable federal income tax return deadline, including extensions, if earlier.
The eligibility question
Not every real estate sale qualifies.
Section 1031 generally concerns real property held for investment or productive use in a trade or business. The character and intended use of both properties matter more than whether they look alike.
Properties that may qualify
- A single-family rental exchanged for another rental
- Residential rentals exchanged for qualifying multifamily property
- Rental real estate exchanged for qualifying commercial property or land
- Other qualifying U.S. investment or business-use real property
Situations that need a different analysis
- A primary residence occupied for personal use
- A property held primarily for resale, including many flips
- A vacation home used primarily for personal purposes
- A partnership interest rather than a direct qualifying real property interest
Three situations we can help you evaluate
Real questions for Colorado property owners.
These are planning examples, not representations of completed client exchanges or promises of eligibility.
SCENARIO / LONG-HELD RENTAL
Is it time to sell the rental house?
An owner of a long-held Centennial rental may want to reinvest in a duplex or another income property. We can evaluate pricing, the likely sale timeline and realistic replacement options.
SCENARIO / FORMER HOME
What if your old home became a rental?
Depending on the facts, rules for former principal residences and investment property can interact. The owner should review Sections 121 and 1031 with their tax advisor before choosing a sale date.
SCENARIO / NEXT CHAPTER
Would a different property fit your life?
An investor considering retirement may want to compare cash flow, management demands, financing and liquidity before deciding whether exchanging makes sense.
A coordinated plan
Different professionals. Clear responsibilities.
Successful exchanges involve more than finding another address. Decisions about value, timing, proceeds, title, financing and tax treatment need to line up before deadlines arrive.
We can assist with the real estate work and collaborate with the qualified professionals you choose. Your intermediary and tax or legal advisors determine the exchange structure and eligibility.
Before the property goes under contract
Three useful conversations to have early.
01. With your tax advisor
Review adjusted basis, depreciation, estimated tax consequences, ownership structure and whether an exchange fits your larger plan.
02. With a qualified intermediary
Confirm exchange documentation, safeguards for proceeds, identification rules, fees and deadlines before the relinquished closing.
03. With our team
Evaluate achievable sale pricing, market conditions, replacement inventory, financing assumptions and a practical sequence for both transactions.
Common questions
A few things worth knowing before you sell.
Can I exchange one rental property for a different type of real estate?
Potentially, yes. Qualifying U.S. investment or business-use real property can often be exchanged for another type of qualifying U.S. real property, such as rental housing, multifamily property, commercial real estate or land. The use and ownership details still matter.
Can I use a 1031 exchange for my primary residence?
A residence held for personal use does not itself qualify. Special rules may apply when a home has been converted to genuine investment use or to mixed-use property. Ask a tax advisor to review the actual occupancy and rental history.
Do I have to purchase a more expensive property?
To fully defer gain, investors generally aim for replacement property of equal or greater value and reinvest all net equity, with careful attention to debt, expenses and any cash received. An exchange involving less reinvestment may create a taxable portion.
Do I have to identify exactly three properties?
No. One common identification method permits up to three replacement properties regardless of value. Alternative identification rules exist for certain transactions. Your intermediary should review the applicable method and written notice.
How long must I own a rental before exchanging it?
There is no single universal one-year or two-year holding requirement for every real property exchange. Whether the property was held for investment or business use depends on the facts. Certain special rules and safe harbors have specific holding periods.
Can I receive the sale proceeds and decide about an exchange afterward?
Don’t assume so. Direct receipt or control of the proceeds can prevent a qualifying deferred exchange. Speak with an eligible qualified intermediary before the sale closes and before taking control of proceeds.
Start with the property
Considering a sale? Let’s look at the whole decision.
Tell us about the investment property and what you’re hoping to accomplish. We can provide local market perspective, discuss possible next-property choices and help you plan the real estate sequence alongside your own tax and exchange professionals.
