---
title: "1031 exchange — What It Means | Ondo RE"
canonical: https://www.ondorealestate.com/glossary/1031-exchange/
---

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# 1031 exchange

Also called: like kind exchange, 1031

A tax provision allowing capital gains deferral when investment property is exchanged for other like-kind investment property.

A 1031 exchange defers capital gains tax when proceeds are reinvested into qualifying replacement property under strict rules, including identification and closing deadlines and the use of a qualified intermediary.

The deadlines are unforgiving and the proceeds generally cannot touch your hands. It defers tax rather than eliminating it.

## Why it matters

The structure has to be in place before you close the sale. This is specialist territory: involve a qualified intermediary and a tax advisor early.

## Related terms

- [DepreciationA tax deduction that lets an owner write off the cost of a rental building over a set recovery period.](/glossary/depreciation/)
- [AppreciationAn increase in a property’s value over time, from market movement or from improvements made to it.](/glossary/appreciation/)
- [Opportunity zoneA designated area where qualifying long-term investments can receive preferential capital gains treatment.](/glossary/opportunity-zone/)

## Go deeper

- [Investment services](/investments/)

## More in Investing

- [1% rule](/glossary/one-percent-rule/)
- [50% rule](/glossary/fifty-percent-rule/)
- [Appreciation](/glossary/appreciation/)
- [CAGR (Compound Annual Growth Rate)](/glossary/cagr/)
- [Cap rate (Capitalization rate)](/glossary/cap-rate/)
- [CapEx (Capital expenditures)](/glossary/capex/)

## Have a question about your own situation?

Ondo handles brokerage, lending, property management and notary under one roof, so the answer does not change depending on who you ask.

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