Should you do a 1031 exchange?
Compare your options side by side. Every situation is different.
Which situation sounds most like you?
1031: Direct Property | 1031: DST | Installment Sale | Opportunity Zone | Sell & Pay Tax | |
|---|---|---|---|---|---|
| Tax treatment | Full deferral of capital gains | Full deferral of capital gains | Spread gains over payment period | Deferral + potential exclusion after 10 years | Immediate capital gains tax due |
| Management | You manage (or hire property manager) | Professional sponsor manages | No ongoing management | Varies by investment | No ongoing management |
| Control | Full control over property decisions | No control; passive investor | N/A — no property acquired | Varies by investment structure | N/A — no property acquired |
| Timeline pressure | 45-day ID + 180-day closing deadlines | 45-day ID + 180-day closing; DSTs can close faster | No exchange deadlines | 180-day investment window | No deadlines |
| Minimum investment | Equal or greater value than sold property | Typically $100K–$200K minimum | No minimum | Varies by fund/investment | No minimum |
| Best for | Investors who want control and direct ownership | Passive investors seeking institutional properties | Sellers who want flexibility without full tax hit | Long-term investors in designated zones | Those prioritizing simplicity over tax efficiency |
| Risk profile | Direct real estate risk; tenant, market, property-specific | Diversified; sponsor risk; illiquidity | Buyer credit risk; interest rate exposure | Development/business risk in OZ areas | No real estate risk; market risk if reinvested |
This table is a planning summary for educational purposes. Consult a tax professional for advice specific to your situation.
Download this comparison as a PDF
Deep Dive: Understand Each Option
A direct 1031 exchange lets you sell one business or investment real property and buy another of equal or greater value, deferring all capital gains taxes. You choose the replacement property, manage it how you see fit, and maintain full control over your investment.
The tradeoff: strict IRS deadlines. You have 45 days from closing to identify up to three replacement properties and 180 days to close. Missing these deadlines means losing the tax deferral entirely.
Pros
- Full control over property selection and management
- Build equity through your own decisions
- Potential for value-add improvements
- 1031 into another exchange later
Cons
- 45-day identification deadline creates pressure
- Must find suitable replacement property quickly
- Ongoing landlord responsibilities
- Concentrated risk in single property
Best for
Investors who want hands-on control, have time to find replacement property, and are comfortable with landlord responsibilities.
Not sure which path is right for you?
Take our assessment to get a personalized recommendation, or talk to an advisor who can help you evaluate your options.