1031 Exchange Services

A 1031 exchange — named after Section 1031 of the Internal Revenue Code — lets you sell an investment property and reinvest the proceeds into another "like-kind" investment property without paying capital gains tax at the time of sale. The tax is deferred, not erased: you carry the gain forward into the new property's basis until you eventually sell without exchanging.

"Like-kind" is broader than most people expect. Any U.S. real property held for investment or business use generally qualifies as like-kind to any other — a Houston apartment building can be exchanged for raw land, a strip center for a warehouse, a duplex for an office condo. Personal residences and property held primarily for resale (flips, dealer inventory) do not qualify.

The single most important rule: you cannot touch the money. A Qualified Intermediary (QI) — an independent third party — holds the proceeds between the sale of your relinquished property and the purchase of your replacement property. If sale proceeds hit your account, or even an account you control, the exchange is dead and the tax is due. That's the role Riverway plays.