There is no limit to the number of 1031 exchanges you can perform in your lifetime. You can use a 1031 exchange as many times as you’d like — and they don’t have to be consecutive or involve the same type of property. As long as each exchange qualifies under the guidelines, it’s not a problem to keep repeating them over time.
However, it’s important to note that if you do decide to do multiple 1031 exchanges, you’ll need to pay careful attention to how much time passes between each one. According to IRS rules, you must complete three steps within specific periods of time for an exchange to qualify:
– identify potential replacement properties within 45 days after selling your original property;
– acquire a replacement property within 180 days after selling your original property; and
– complete all paperwork associated with the exchange within 180 days after selling your original property.
Your ability to identify, acquire and complete paperwork for multiple exchanges in that time frame will be key to successful 1031 exchanges. So it’s important to stay organized and have everyone involved on the same page when planning multiple 1031 exchanges.
Additionally, you’ll want to keep track of your basis — or cost — between each exchange. When you sell a property through an exchange, the amount of gain (or loss) from the sale is taxable unless you roll it over into another qualified 1031 exchange. If you do use a 1031 exchange multiple times, the basis of your replacement property will start with the basis of your original property.
Finally, it’s important to remember that 1031 exchanges are complex transactions and should be handled carefully. It’s always a good idea to work with an experienced professional who can help you through each step of the process. With careful planning and help from a qualified expert, multiple 1031 exchanges can be a great way to defer taxes while investing in real estate.
As you can see, there is no limit to how many times you can use a 1031 exchange — and it can be a great way to benefit from tax-deferred real estate investments. Just make sure to stay organized, pay careful attention to the timelines and get some help from an experienced professional if needed. With that in mind, you’ll be well on your way to successful multiple 1031 exchanges.
