Your Essential Guide to 1031 Exchanges in San Diego

If you own investment property in San Diego and are thinking about selling, a 1031 Exchange might be your best wealth-building move yet.

Used properly, it allows you to defer capital gains taxes and reinvest the full value of your property into something that better fits your life — without losing your shirt to Uncle Sam.

Here’s what every smart investor should know:

What Is a 1031 Exchange?

A 1031 Exchange (named after IRS code Section 1031) lets you sell one investment property and buy another—while deferring capital gains taxes. That means you keep more of your money working for you.

Let’s say you bought a San Diego duplex years ago for $400K and now it’s worth $900K. If you sell it outright, you might owe $100K+ in capital gains taxes. But with a 1031 Exchange? You could reinvest the full $900K into a new property and pay no tax (yet).

Why Use It?

✅ Preserve more equity for your next investment
✅ Upgrade properties (more cash flow, less maintenance)
✅ Diversify your portfolio or move out of California
✅ Plan for retirement or eventual estate transfer
✅ Avoid depreciation recapture on older properties

Basic Rules You Need to Know

1. Like-Kind Exchange:
   The new property must be “like-kind,” meaning it must also be held for investment or business. (You can go from a rental house to a strip mall.)
   
   2. Timeline is TIGHT:
   - Identify your next property within 45 days of closing
      - Complete the purchase within 180 days
   
   3. Use a Qualified Intermediary (QI):
      You cannot touch the money. A QI holds your funds and facilitates the exchange. I have trusted partners to refer.

Common Mistakes (and How I Help You Avoid Them)

❌ Missing the 45-day deadline
❌ Choosing a property that doesn’t qualify
❌ Not planning for future taxes
❌ Working with someone who’s not 1031-savvy

That’s where I come in. As a Certified Real Estate Planner®, I help clients structure these moves the right way — including creative strategies like Delaware Statutory Trusts (DSTs) when managing property isn’t worth the stress anymore.

Let’s Plan Your Exchange

Whether you’re ready to trade up, retire out, or just escape landlord burnout, a 1031 Exchange can give you more options than you think.

But the clock starts the day you close — so don’t wait.

Let’s talk now so you’re ready when the time comes.
Schedule your free consultation: https://www.maggieclemens.com/contact