IPX1031 Insight Blog

1031 Exchange and Defer? Or Sell and Pay Taxes?

Coming out of a global pandemic and rising interest rates have not hindered the positive outlook of the CRE industry. Last year saw a record number of 1031 Exchanges, and halfway through 2022, transactions remain robust. If you are considering the sale of investment property, rather than a tax liability of up to 40%, you may utilize a 1031 Exchange to defer the following taxes:

  • Capital Gains – Your rate will vary based on your taxable income . For 2024, your rate may be 20% if taxable income exceeds $518,900 (single) or $583,750 (married filing jointly).
  • Net Investment Income Tax (NIIT) – If you have income from investments, including capital gains, you may be subject to a 3.8% net investment income tax on your adjusted gross income in excess of $200,000 ($250,000 if married filing jointly). Read more to see if this applies to you.
  • State tax –You may be subject to state or local income taxes. State tax rates vary from 0% to the highest rate in California at 13.3%. See 2024 rates here.
  • Depreciation Recapture – A flat Federal tax rate of 25% is applied for unrecognized gain due to depreciation.

Capital Gain Estimator

Use our Capital Gain Estimator tool that illustrates potential taxes to be paid in a taxable sale vs. a 1031 Exchange.


Tax and Legal Advisors

The calculation of taxes involves many factors and your individual situation may require additional variables. Speak to your tax or legal advisors.


IPX1031. The best choice for your 1031. 

Investment Property Exchange Services, Inc. (IPX1031) is the largest and one of the oldest Qualified Intermediaries in the United States. As a wholly owned subsidiary of Fidelity National Financial (NYSE:FNF), a Fortune 500 company, IPX1031 provides industry leading security for your exchange funds as well as considerable expertise and experience in facilitating all types of 1031 Exchanges. Taxpayers’ funds are held in segregated accounts using the Exchanger’s taxpayer identification number. Our nationwide staff, which includes industry experts, veteran attorneys, and accountants, are available to assist your legal and tax advisors. For additional information regarding IPX1031 and questions on 1031 Exchanges, please review:

Capital Gains Estimator
Opportunities of the 1031 Exchange
1031 vs Paying Tax & 1031 Guidelines
Does NIIT Tax Apply to You?
What is a 1031 Exchange?
IPX1031 Knowledge Center

Locate a 1031 Expert In Your Area

Recent Posts

Can You Change Spousal Ownership in a 1031 Exchange?

Will Adding/Deleting My Spouse Impact My 1031 Exchange?Generally, no changes should be made to the way title to property is held shortly before or after property is sold/purchased via a 1031 Exchange. For example, if title to an apartment building is held by Lisa and...

1031 Update on Capitol Hill – April 2024

1031 Coalition Letter & DC Fly-In​ April 17, 2024 IPX1031, in conjunction with our industry trade organization the Federation of Exchange Accommodators (FEA), worked with the Real Estate Roundtable to circulate an updated 1031 Coalition letter to leaders of...

The Build to Suit Exchange

The build-to-suit exchange, also referred to as a construction or improvement exchange, gives the Exchanger the opportunity to use all or part of the exchange funds for construction, renovations or new improvements to the Replacement Property.

1031 Update on Capitol Hill – March 2024

Biden Releases FY2025 Budget Proposal March 14, 2024 Consistent with its prior budget proposals, the Biden Administration has proposed capping the gain that can be deferred through a like kind exchange at $500,000 per taxpayer ($1,000,000 for a married couple filing...

Pin It on Pinterest