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1031 exchange transactions have grown in popularity in recent years—especially with buyers looking to take advantage of top pricing and avoid capital gains taxes. While these exchanges are popular, they can also be difficult in this market considering the competition for quality assets and the limited supply of for-sale properties. Timing—the key to a 1031 exchange—becomes a crucial obstacle and buyers need to prepare before entering the process.

“1031 exchanges are a notoriously difficult transaction to do well, and the biggest reason is timing and complexity,” Davin Carey, managing financial advisor at Carey & Hanna, tells GlobeSt.com. “Timing is the big one, and people underestimate how significant that timing pressure it. For a 1031 exchange to be successful, there are a few things that need to happen, otherwise it is not fully tax deferred, or in some cases if you do it wrong, none of the taxes are deferred and they are due immediately.”

Kelsi Maree Borland

Kelsi Borland is a freelance writer and editor living whose work has appeared in such publications as Travel + Leisure, Angeleno and Riviera Orange County.

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