1031 Exchange in California: How SoCal Owners Defer Tax
If you’re in this spot: you own a rental, possibly an inherited house you’ve been renting, and you want a better or easier property without paying tax on the gain now.
Get your options
Confidential · No obligation- Tell us your situation and the property
- We review title, taxes and ownership
- You get plain-English options to bring to your CPA
Or call (619) 996-0830
Mon–Fri, 10am–5pm
Please note: This is general information, not tax or legal advice. Consult a CPA or attorney about your situation.
How it works
You sell investment or business property and buy other investment property through a qualified intermediary who holds the money. The tax is deferred, and your old basis carries over. It doesn’t work for your own home. For that, see the home-sale exclusion.
Key rules
- Deadlines. Identify the replacement in writing within 45 days. Close within 180 days or by your tax-return due date (with extensions), whichever comes first. No extensions.
- No cash in hand. You must never touch the cash.
- Equal or up. Buy equal or greater value and replace your debt. Any shortfall (“boot”) is taxed.
California notes
California follows 1031. If you trade California property for out-of-state property, file FTB Form 3840 that year and every year after until the gain is taxed. The new property gets a new Prop 13 base, so property tax usually rises. Opportunity Zones: federal rules change for gains on or after January 1, 2027, and California generally doesn’t follow the federal deferral. Check current rules.
Common mistakes
- Taking the sale cash
- Missing day 45
- Buying smaller and owing tax on the difference
- Trying to exchange a home you live in
Example (hypothetical)
You sell a rental for $800,000 with a $500,000 gain and buy a $900,000 fourplex through an intermediary. No current federal or California tax is due on the $500,000.
Trading directly with another owner? See the deed-for-deed exchange. Back to the full guide to selling in California and legally reducing taxes.
(real photo goes here)
“I’m Erwin Miciano. I started SoCal Property Resolution because the families I met weren’t looking for a flashy cash offer. They were stuck: a house split between relatives, a probate case that wouldn’t move, a tax bill nobody knew about. My job is to explain your options honestly. Sometimes that means buying, and sometimes it means pointing you somewhere else.”
Frequently asked questions
Can I do a 1031 exchange on my primary home?
No. A 1031 exchange is for investment or business property. Your own home may qualify for the Section 121 exclusion instead.
What are the 1031 exchange deadlines?
Identify the replacement in writing within 45 days and close within 180 days or by your tax-return due date, whichever comes first. There are no extensions.
Can I exchange California property for property in another state?
Yes, but you must file FTB Form 3840 that year and every year after until the gain is taxed.
Talk it through with someone local
Confidential, no pressure. Mon–Fri, 10am–5pm · info@selltosemi.com
Get My OptionsCall (619) 996-0830This is general information, not tax or legal advice. Consult a CPA or attorney about your situation. SoCal Property Resolution is a real estate investment company that may buy property or ownership interests as a principal. We are not attorneys, tax advisors, real estate agents or a government agency. Figures were checked October 2026 and change over time; confirm current rules with a qualified California CPA or attorney before you act.
