Can you do a 1031 exchange on the sale of business?
Henry Morales
Published Mar 02, 2026
You can perform a 1031 exchange on the company’s real estate and sell the business to a buyer at the same time. You could also sell only the business’s real estate, without selling your business, and use a 1031 exchange to benefit from tax-deferment while continuing to operate the business.
Who holds the cash in a 1031 exchange?
A qualified intermediary is a person or company that agrees to facilitate the 1031 exchange by holding the funds involved in the transaction until they can be transferred to the seller of the replacement property. The qualified intermediary can have no other formal relationship with the parties exchanging property.
What documents are needed for a 1031 exchange?
What Documents are Needed for a 1031 Exchange?
- Purchase and Sale Agreement. The purchase and sale agreement is standard documentation in any real estate sale.
- Exchange Agreement.
- Form 8824.
- Final Closing Statement and Deed.
- Additional Documents — By State.
Do you get cash proceeds from 1031 exchange?
By its very nature, a 1031 exchange means you aren’t entitled to any cash proceeds from relinquishing your asset. Finally, deferring tax payments through an asset exchange isn’t always a sound business plan.
What does 1031 exchange stand for in real estate?
Updated Mar 12, 2021 In real estate, a 1031 exchange is a swap of one investment property for another that allows capital gains taxes to be deferred. The term, which gets its name from IRS code…
Do you need to replace debt in 1031 exchange?
You do not need an equal amount of debt on your replacement property in a 1031 exchange. You only need to replace the full value of the debt. Yes, trading into a property with a larger mortgage does avoid mortgage boot. But remember you can also deleverage by bringing outside cash to make up the difference.
What do you need to know about 1031 like kind exchange?
If you’ve recent ly completed a 1031 like-kind exchange, you need to document your transaction for your accounting records.Although a deferred gain is an unearned revenue, it represents a future asset that counts as a liability on your balance sheet. Gains are seen as a liability until realized as an asset.
