Defer Taxes. Build Wealth. Upgrade Your Portfolio.

A 1031 Exchange, also known as a like-kind exchange, allows you to sell an investment or business-use property and reinvest the proceeds into another investment property — without paying capital gains taxes at the time of the sale.

This IRS-approved strategy helps you keep more equity working for you so you can grow your real estate wealth faster and smarter.

Step 1: Sell Your Investment Property

The property must be held for investment or business use (not your primary residence).

Step 2: Use a Qualified Intermediary (QI)

A third-party holds your funds so you don’t receive the money directly.

Step 3: Identify Your Replacement Property (45 Days)

You can identify up to three properties—or more under special rules.

Step 4: Complete the Purchase (180 Days)

You must close on the new property within 180 days of the sale.

Step 5: Defer Capital Gains Taxes

As long as rules are followed, you defer taxes and roll all of your equity forward.

“Like-kind” doesn’t mean the properties need to be the same type.

Examples of qualifying exchanges:

• Condo → Single-family rental

• Residential rental → Commercial property

• Land → Apartment building

• Office building → Warehouse

As long as both are for investment or business use, they typically qualify.

Why Investors in Hawai‘i Use It

• Defer capital gains taxes (potentially hundreds of thousands saved)

• Increase cash flow

• Upgrade to a better-performing property

• Consolidate or diversify your portfolio

• Move from active to passive investing (DST option)

• Build long-term generational wealth

⭐ A 1031 Exchange is one of the most powerful wealth-building tools available to real estate investors.

• Want to sell but worried about the tax hit

• Tired of being a landlord

• Want to retire from property management

• Need to diversify into safer or out-of-state investments

• Want to transition into passive income opportunities

To qualify, you must follow IRS rules:

• Property must be investment or business-use

• Must use a Qualified Intermediary (QI)

• No touching the proceeds (must go to the QI)

• Identification within 45 days / closing within 180 days

• Must reinvest full proceeds & take on equal or greater debt to defer 100%

IMPORTANT:
Always consult with your tax advisor or attorney. Team Lally coordinates, but does not provide tax or legal advice.

Many investors choose a DST when:

• They want passive income

• They no longer want to manage tenants, toilets, or repairs

• They want institutional-grade real estate (multifamily, industrial, medical, storage, etc.)

• They need a backup option if their 1031 deadlines are tight

Learn How a DST Can Work for You → What is a DST

It may be a good fit if you:

• Own an investment property in Hawai‘i

• Want to sell without taking a tax hit

• Want to upgrade, diversify, or go passive

• Want to build long-term wealth and protect more equity

Team Lally has helped hundreds of Hawai‘i property owners understand their options.