Market Resource Library
Investor Guide: 1031 Exchanges in Florida
A plain-language overview of how Section 1031 exchanges work for Florida investment property.
What It Is
Section 1031 of the Internal Revenue Code lets an investor defer federal capital gains tax on the sale of business or investment real property — as long as the proceeds are reinvested into "like-kind" replacement property rather than taken as cash.
Why Florida Investors Use It Often
Florida has no state income tax, so for an in-state exchange the deferral is purely a federal capital-gains matter — there's no additional state-level tax on the gain to plan around.
The Two Deadlines
Both run from the closing date of the property sold:
45 Days
To formally identify potential replacement property in writing.
180 Days
Total (or your tax filing deadline for that year, if earlier) to close on the replacement property.
The Qualified Intermediary (QI) Requirement
The investor can never directly receive or control the sale proceeds during an exchange — a Qualified Intermediary must hold the funds between closings, or the exchange is disqualified entirely. The QI needs to be engaged before the first closing, not after.
What Counts As "Like-Kind"
For real estate, this is interpreted broadly. Almost any U.S. real property held for investment or business use can be exchanged for almost any other — for example, a rental condo for a small apartment building — as long as both properties are held for investment or business purposes, not personal use.
Equal-Or-Greater Value Rule
To defer 100% of the gain, the replacement property’s price and any new financing must be equal to or greater than what was sold. Buying "down" in price or in debt creates partially taxable "boot."
Common Florida Use Cases
Two patterns come up often here: consolidating an out-of-state rental into a South Florida property, or trading up from a single rental into a larger income property.
This overview is educational, not tax or legal advice. 1031 exchange rules are detailed and deadline-driven — always work with a CPA and a qualified intermediary before selling, and loop Jessica in early so replacement-property search can start before the 45-day clock is a factor.
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