1031 Exchanges With Multiple Relinquished Or Replacement Properties

A 1031 exchange allows an individual to sell a property and use the funds from that sale to assist in the purchase of a similar property without needing to pay capital gains taxes on the proceeds received from the sold property. It’s a great way to move from one property to another without incurring a large tax bill, but what happens if you’re not trying to utilize the tax benefit for a one-to-one exchange? In today’s blog, we explore how a 1031 exchange is processed if you’re hoping to relinquish or acquire multiple properties.

1031 Exchanges With Multiple Relinquished Properties

You are well within the tax code to put the proceeds of multiple properties towards the acquisition of a singular property. Perhaps you’re getting older and want to consolidate some of the investments, or you want to retire and move closer to family or warmer weather, and you want to exchange some properties for something closer to your new residence. There are plenty of reasons why someone would want to sell multiple properties and put those funds towards a larger, singular investment.

Of course, it will be a bit trickier to perform a 1031 exchange if you’re trying to move on from multiple properties, but it’s something we’ve done with clients in the past and we’d be happy to help you do the same. The biggest obstacle is the 45- and 180-day required windows for an exchange.

• You have 45 days from closing on your relinquished property to identify your replacement properties.

• You have 180 days from closing of the relinquished property to close on the purchase of the replacement property.

The same standard applies regardless of how many properties are being sold, but it’s important to recognize that the timer begins with the first sale. There are a few tactics you can use in this situation, including negotiating an extended closing with your buyer, or listing your properties at a competitive price to increase your odds of finding a buyer within that window, and we’d be more than happy to help you navigate the process successfully should you be looking to sell multiple properties within a 1031 exchange.

1031 Exchanges With Multiple Replacement Properties

Conversely, you can also sell one property and use the proceeds to fund the acquisition of multiple replacement properties. This may be wise if you’re looking to diversify your investment portfolio, or you’re hoping to capitalize on combined appreciation.

• Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved 

How The 1031 Exchange Has Evolved Over 100 Years

The 1031 exchange is a masterful piece of tax strategy that can save savvy investors a lot of money as they buy and sell commercial property. The 1031 exchange that we know today is still being affected by tax code changes, and it’s been evolving for more than 100 years.

The Origin Of The 1031 Exchange

The first form of the 1031 exchange was born out of the passage of the Revenue Act of 1921. The goal of the tax code was to encourage investment and growth in America’s real estate market. The premise of the original 1031 exchange tax code remains largely similar to this day, as it allows for the exchange of one property for another without incurring capital gains or related taxes on the sale of the original property, so long as that money is put towards the purchase of a similar-styled property. This move allowed investors to keep their money in real estate and continue to purchase and develop new properties, which was seen as largely beneficial for citizens, communities and the country as a whole.

Of course, tweaks and updates to the tax code were necessary as the decades rolled on. While minor updates were made along the way, the biggest change came in 1979. That occurred when the 9th US Circuit Court of Appeals provided a ruling in TJ Starker v. United States. This decision effectively placed a five-year timeline on when the exchange needed to be completed to be legal.

Not surprisingly, that timeline was reigned in a bit just a few years later. In 1984, Congress codified 45- and 180-day identification and purchase period windows, and prohibited exchanges wherein a partnership interest exists. Then in 1991, more protections were added. Purchasing funds were allowed to be put in a trust or escrow, and the use of a Qualified Intermediary, which brought a neutral third party into the process to facilitate a safer and smoother sail, was introduced.

Some additional changes we’ve seen in recent years include:

• 2005 - Updates were passed on how rental property converted to a primary residence, and vice versa, were handled in a 1031 exchange.

• 2008 - Added regulations when investing/exchanging vacation/second homes.

• 2017 - Personal property removed from 1031 exchange treatment.

However, the original nature of the law first passed in 1031 remains the same, which is that you can avoid paying capital gains taxes when selling one commercial property and using those funds to purchase a similar like-kind property.

• Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved 

Video – Finding the Strike Zone for 1031 Exchanges

Since it’s baseball season, we should talk about the 1031 exchange “strike zone” – the ideal place you want your property to be in order to set yourself up for success.

The strike zone is property that’s held for investment or business purposes. That’s where you want the “ball” to be. Outside of the strike zone (stuff that doesn’t qualify for 1031 exchange) is inventory, property held primarily for resale, and personal use property (i.e. property that’s used as your second home, your recreational property, or anything that’s not used primarily for investment or business). Those properties are generally outside of the strike zone and cannot be used in a 1031 exchange transaction.

Take the First Step in Your 1031 Exchange Journey

If you’re ready to take the first step in your 1031 exchange journey and defer your capital gains taxes when selling investment real estate, contact the team at CPEC1031, LLC today. Our qualified intermediaries can help you through your entire 1031 exchange journey – from beginning to end. We have decades of experience in the 1031 exchange industry and can help make sure you are following all the 1031 exchange rules and guidelines so that you can ultimately defer your capital gains taxes. Reach our team today at our Minneapolis office to learn more!

• Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved

3 Myths About 1031 Exchange Property

There are many misconceptions and myths surrounding like-kind exchanges of real estate. In this article, we are going to debunk three common myths about property involved in a 1031 exchange.

Myth: You Have Ask Much Time As You Want to Complete Your Exchange After Selling Your Property

1031 exchanges are propped up by strict deadlines. After you sell your relinquished property, your exchange period begins and you only have 180 days total to complete the process. On top of that, you have a 45-day identification period that runs concurrently with your exchange period. During this time you have to give written identification of the properties you intend to exchange into. These are strict deadlines that you don’t want to miss.

Myth: Your Replacement Property Has to Be Locked In Before Beginning the 1031 Exchange Process

While it’s usually a good idea to have your replacement property dialed in before beginning the process, you do have 45 days after starting the exchange in which to find and identify your property.

Myth: You Can Use a Personal Residence in a 1031 Exchange

All property used in your 1031 exchange has to be held for the right intent (that of investment or business purposes). That means your personal residence would not meet the requirements of section 1031.

Defer Your Capital Gains Taxes with a 1031 Exchange

Defer your capital gains tax burden when selling investment or business real estate by conducting a 1031 exchange rather than a straight forward sale. Keep your money working for you and build your wealth over time. At CPEC1031, LLC we have decades of experience facilitating 1031 exchanges in Minnesota and across the country. Reach out to our team of professionals today to learn more about the 1031 exchange process and get started with your like-kind exchange. You can find us at our primary office location in downtown Minneapolis.

• Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved

Video - Questions to Ask When Vetting a Qualified Intermediary

When conducting a 1031 exchange, it’s important to properly vet your qualified intermediary. Here are some questions to ask about your qualified intermediary before you make the decision to hire them for your like-kind exchange:

• Do they have a professional license? Are they an attorney licensed to practice law? Are they a CPA who’s gone through that rigorous examination?

• Do they have an A+ rating with the BBB? Do they have a lot of good reviews on Google?

• Have they been in business for decades or are they new to the industry?

• Are they actually authorized to do business in your state?

• Do they use separate, segregated bank accounts or do they put all their client monies into one bucket?

CPEC1031, LLC – Your 1031 Exchange Resource

CPEC1031, LLC is your resource for all things related to 1031 exchanges. For the past several decades, we have been helping taxpayers just like you defer taxes under section 1031 of the Internal Revenue Code. We can help you keep your money working in a continued investment. Contact us today to learn more about the 1031 exchange process, its benefits, and how we can help facilitate your next like-kind exchange. Our team operates out of our primary office in downtown Minneapolis but we work with clients across the United States.

• Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved