A 1031 exchange lets an owner of investment or business property defer federal capital gains tax by putting the sale proceeds into a similar property within strict deadlines, rather than taking the cash. The replacement property has to be identified within 45 days and the purchase closed within 180 days. It applies to investment property, not a personal residence, and the rule is federal.
Why it matters
A 1031 exchange defers the tax bill on an investment property sale, it does not erase it.
General information, not legal or tax advice.