Questions & answers
How much does a 1031 exchange qualified intermediary cost?
A qualified intermediary (QI) for a standard delayed 1031 exchange typically costs about $600 to $1,500 in base fees, sometimes plus small per-property charges; reverse and construction exchanges cost more. That fee is minor next to the tax a 1031 defers — often tens or hundreds of thousands of dollars. Confirm current pricing directly with the QI, and treat this as general information, not tax advice.
What is the real, all-in cost of a 1031 exchange?
Beyond the QI fee, budget for normal closing costs on both the sale and the purchase (escrow, title, recording), any lender fees on replacement financing, and your own advisors (CPA, attorney). The largest "cost" is actually the tax you would owe without the exchange — federal capital gains, depreciation recapture (up to 25%), the 3.8% net investment income tax, and California state tax, which has no preferential capital-gains rate. Model the numbers with your CPA before deciding.
Can I use AI to find off-market properties for my 1031 exchange?
AI can help you surface motivated-seller opportunities fast, but be careful what "off-market" means. PropScoutr focuses on real, broker-listed MLS properties and uses AI to rank them across 11+ seller-motivation signals — not blind "wholesale" blasts with undisclosed spreads. For a deadline-driven 1031 that means you see actionable, represented options quickly. Start with a
free assessment.
What is the 3-property identification rule?
The 3-property rule lets you formally identify up to three potential replacement properties within 45 days of your sale — regardless of their value — and close on one or more. If you want to identify more than three, you must instead satisfy the 200% rule or the 95% rule. Identification must be in writing, signed, and delivered to your QI by day 45.
What happens if I identify more than 3 properties?
You can identify more than three, but only under one of two alternative rules. The 200% rule lets you identify any number of properties as long as their combined value does not exceed 200% of what you sold; the 95% rule lets you identify any number or value but requires you to actually acquire at least 95% of the total value you identified. Miss both and the over-identification can disqualify the exchange.
How long do I have to find replacement properties?
You have 45 calendar days from the sale of your relinquished property to identify replacements in writing, and 180 calendar days total to close — or your tax-return due date including extensions, whichever comes first. These deadlines are strict, include weekends and holidays, and are essentially never extended except for IRS-declared disasters. That is why fast, pre-screened deal flow matters.
What happens if I miss the 45-day identification deadline?
If you do not properly identify replacement property by day 45, the exchange generally fails and your entire gain becomes taxable that year. There is no partial credit and no routine extension. The practical defense is to line up scored, actionable candidates well before the clock runs down.
Do I really need a qualified intermediary?
Yes — in nearly every 1031 exchange you legally need a QI, because you cannot take "constructive receipt" of the sale proceeds. The QI holds the funds between your sale and your purchase; if the money touches your hands or bank account, the exchange is disqualified. Choosing an experienced, bonded QI is one of the most important early decisions.
Is it true you can exchange crypto for real estate tax-free?
No. Since the 2017 Tax Cuts and Jobs Act, Section 1031 applies only to real property held for investment or business use. Cryptocurrency, stocks, and other personal property no longer qualify, so you cannot 1031 crypto into real estate or vice versa. U.S. real-estate-for-real-estate is the lane.
What is the difference between a 1031 exchange and a regular sale?
In a regular sale you receive the proceeds and pay tax on the gain that year. In a 1031 exchange, a qualified intermediary holds the proceeds and you roll them into like-kind replacement real estate, deferring the capital-gains and depreciation-recapture tax. The trade-off is the strict 45/180-day deadlines and the rule that you never touch the cash.
How do I identify replacement properties without overpaying?
Overpaying usually happens when deadline pressure makes you reach. The fix is to evaluate each candidate on fundamentals — comparable sales, price-per-square-foot, condition, days on market, and seller-motivation signals — instead of bidding blind. PropScoutr scoring surfaces where a listing may be negotiable and flags what to verify, and a licensed buyer’s broker represents you in the offer. Try a
free assessment.
What does "like-kind" actually mean for real estate?
For real estate, "like-kind" is very broad: almost any U.S. real property held for investment or business use is like-kind to almost any other. You can exchange a rental condo for raw land, an apartment building, or a retail strip — type and quality do not have to match, only the investment or business purpose. Property held as your personal residence or as dealer/resale inventory does not qualify.
What does "equal or greater value" mean in a 1031 exchange?
To defer 100% of your tax, your replacement property’s purchase price, equity, and debt should each equal or exceed what you gave up. If you buy cheaper, take cash out, or reduce your debt without offsetting it, the difference ("boot") is taxable. Many investors deliberately trade up to stay fully deferred.
Can I identify properties in multiple states?
Yes. Any real property located in the United States is like-kind to any other U.S. real property, so you can sell in California and buy in Texas, Arizona, or anywhere domestic. Foreign real estate is not like-kind to U.S. real estate. PropScoutr itself focuses on four Southern California counties — Los Angeles, Orange, Riverside, and San Bernardino.
Can I change my identified properties after I submit them?
Yes — but only before the 45-day deadline. Up to day 45 you can revoke and re-identify in writing as often as you like; after midnight on day 45 your list is locked and you can only close on what is on it. Plan as if the list is final the moment you submit it.
Why is property sourcing for a 1031 so expensive or slow?
Traditional sourcing is slow because it is manual — agents and finders hunt deals one at a time, and some charge premium fees for off-market access. PropScoutr compresses that by scoring active listings automatically across 11+ motivation signals, so qualified buyers see ranked candidates immediately and stay represented by a licensed broker, with every fee disclosed. That speed is especially valuable inside a 45-day window.
How do professionals find motivated-seller deals?
Experienced buyers watch for public signals of motivation — pre-foreclosure / Notice of Default filings, probate and trust sales, absentee owners, long days on market, and repeated price cuts — then move quickly with financing ready. PropScoutr automates that signal detection on MLS listings and shows the breakdown on every deal, so you are not guessing. No black-box scores, no wholesale assignments.
Is a 1031 exchange still worth it after all the costs?
For most investors with a meaningful gain, yes — the few thousand dollars in QI and transaction fees are small against deferring federal capital gains, up to 25% depreciation recapture, the 3.8% NIIT, and California state tax. It is least worth it when your gain is small, you need the cash, or you cannot find suitable replacement property in time. Model it with your CPA before committing.
What information do I need before calling a qualified intermediary?
Have your relinquished property’s sale details (escrow/closing date, sale price, loan payoff), your entity and vesting information, and a rough idea of your replacement targets and price range. The QI must be engaged before your sale closes, so call early. Bring your CPA and a buyer’s broker into the conversation at the same time.
How do I verify a property is actually available and fairly priced?
Confirm status with a licensed agent (active vs. pending vs. contingent), then pressure-test price against recent comparable sales, price-per-square-foot, condition, and days on market. PropScoutr scores those fundamentals and flags risks to verify; your buyer’s broker then confirms availability and writes the offer. Get a free read at
the assessment.
What mistakes do people make identifying 1031 properties?
The big ones: waiting too long to start the search, identifying property they have not actually vetted, ignoring the 200%/95% limits when listing more than three, and forgetting that debt and equity — not just price — drive full deferral. Deadline panic causes most overpayment. Pre-screened, scored candidates reduce all of these.
Why do smart investors use property-sourcing services for 1031s?
Because the 45-day clock rewards speed and screening. A good service delivers vetted, ranked candidates so you spend limited time on real options instead of lead-chasing. PropScoutr pairs that AI deal intelligence with licensed buyer representation — you get both the data and someone to write the offer — with every fee disclosed.
Can I do a 1031 exchange on a tight timeline?
Yes — most exchanges run on the standard 45/180-day clock, which is "tight" by design. Surviving it is about preparation: engage your QI before closing, pre-arrange financing, and have scored replacement candidates ready so identification is not a scramble. That is exactly the gap PropScoutr is built to close.
Can I use an AI tool to decide between replacement properties?
AI is well-suited to ranking candidates on consistent criteria — comps, price-per-square-foot, condition, days on market, and motivation signals — so you compare apples to apples instead of going on gut feel. PropScoutr does this and shows its reasoning on each deal, but the final call and the offer should run through your licensed buyer’s broker and advisors.
Educational information only — not investment, legal, or tax advice. PropScoutr is operated in partnership with a California-licensed brokerage, CalDRE #01179174. Buyer representation is provided under a written buyer-broker agreement.