US 2028 1031 Exchange
2028 1031: defer cap gains + 25% depreciation recapture by reinvesting in like-kind real estate. 45-day ID + 180-day close deadlines. Step-up at death = permanent escape.
| Total gain | — |
| Depreciation recapture 25% | — |
| Capital gains tax | — |
| NIIT 3.8% | — |
| Total deferred 2028 | — |
IRC Section 1031 like-kind exchange defers federal capital gains tax + 25% depreciation recapture by reinvesting sale proceeds in similar real estate. Strict deadlines: identify replacement property within 45 days of sale + close within 180 days. Step-up in basis at death = permanent escape (heirs inherit at fair market value basis = zero gain).
Like-Kind Real Estate Only
Post-TCJA (2018+): 1031 exchanges limited to real estate. Personal property exchanges (equipment, vehicles, art) no longer qualify. Real estate must be held for investment or business use — not primary residence (different exclusion: $250k/$500k MFJ).
45-Day + 180-Day Rules
From sale closing: 45 days to identify potential replacement (up to 3 properties OR more if total value < 200% of relinquished). 180 days to close. Both run concurrently — they share the 180-day window, not consecutive.
Qualified Intermediary (QI) Required
Cannot touch sale proceeds — they go through QI from sale closing to replacement closing. QI fees $1,000-$2,500 per exchange. Vet QI carefully — they hold large amounts of your money.
Step-Up at Death = Forever Deferred
Property held in 1031-exchanged property until death: heirs inherit at FMV basis. All deferred gains permanently escape tax. Powerful estate planning combined with lifetime 1031 chains.
Last updated May 2026. Sources: IRS Sec 1031.