Glossary

Replacement property is the real estate an investor acquires in a 1031 exchange to take the place of the property sold (the relinquished property). It must be real property held for investment or business use, identified in writing within 45 days of the sale, and received by the end of the exchange period. The property acquired must be substantially the same as the property identified.

Key Points

• Value and debt: To defer all of the gain, the replacement property generally needs equal or greater value and debt, or added cash. Cash kept from the sale is generally taxable.
• Same taxpayer: The same taxpayer that sells must generally buy the replacement property.
• DST interests: Some investors identify an interest in a Delaware Statutory Trust (DST) as their replacement property, or as a backup if a direct purchase falls through.

To learn more, find your 1031 exchange deadlines, or review the 1031 Exchange Checklist.