Tax deferral, compounded
A completed exchange defers federal capital gains tax, depreciation recapture (up to 25%) and the 3.8% net investment income tax. Capital that would have left for the Treasury stays invested and keeps compounding.
MurivestUnited States
The tax you defer is the capital you keep working.
Murivest advises institutional investors, family offices and private principals on 1031 exchanges into US multifamily apartments. We source the replacement asset, govern both deadlines and coordinate your intermediary, counsel and brokers, so that a tax-deferred exit becomes a disciplined entry.
- 45 Days
- To identify replacement property
- 180 Days
- To close, or return due date if earlier
- §1031
- Real property only since 2017
- Form 8824
- Filed for the year of exchange
What It Is
The most powerful provision in US real estate taxation.
A 1031 exchange allows a US real estate investor to defer federal capital gains tax by selling investment property and reinvesting the proceeds in like-kind real property, identifying replacements within 45 days and closing within 180. Since 2017, it applies to real property only.
Section 1031 of the Internal Revenue Code converts what would be a taxable event into a continuation of the same investment. For an investor sitting on a heavily appreciated asset, the difference is not marginal. It is the difference between reinvesting the whole of your equity and reinvesting what remains after the tax bill.
Murivest advises on the half of the exchange that most investors underestimate: finding, underwriting and securing the right replacement asset inside a non-negotiable clock. We focus that discipline on one asset class, US multifamily apartments.
Portfolio repositioning
Move from management-intensive or late-cycle assets into better-located, more institutional property without a tax toll on the transition.
Estate efficiency
Under current law, deferred gain can be eliminated at death through the step-up in basis. For family offices, the exchange is a multi-generational planning instrument, not merely a transaction.
The Multifamily Thesis
Why sophisticated capital exchanges into apartments.
Multifamily is where tax deferral, durable demand and scalable operations converge. For investors consolidating or leaving other property types, it is the natural destination.
01
Resilient Demand
Housing is a non-discretionary expense. Apartment income has historically been steadier than office or retail, which supports lender appetite and exit liquidity.
02
Structural Undersupply
Household formation, high ownership costs and constrained supply in many metros sustain renter demand. Submarket selection, not national headlines, determines returns.
03
Operational Scalability
Professionally managed communities offer levers beyond appreciation: standardised operations, value-add programmes and rent growth.
04
Depreciation Shelter
A new basis in replacement property resets depreciation (27.5 years for residential rental), and cost segregation can accelerate deductions. Model both with your tax adviser.
05
Lender Depth
Fannie Mae and Freddie Mac provide competitive, long-dated debt for stabilised apartments, which improves the arithmetic of debt replacement.
06
Exit Optionality
Apartments draw the deepest buyer pool in commercial real estate: private capital, REITs, institutions and further 1031 buyers.
The best exchanges are designed before the sale is signed. Begin sourcing now.
Request a Confidential BriefingThe Exchange Clock
Two deadlines. No extensions. No exceptions.
The statutory timeline is the single greatest source of failed exchanges. We build the calendar on the day we are engaged, not the day you sell.
Day 0
Sale closes
Proceeds go directly to the qualified intermediary. If the seller touches the funds, the exchange fails. The intermediary must be engaged before closing.
Day 45
Identification deadline
Replacement properties must be identified in writing, signed and delivered to the intermediary or another permitted party. There are no extensions.
Day 180
Exchange deadline
Close by day 180, or the return due date including extensions if earlier. Filing an extension protects the full 180 days.
Identification Rules
Three ways to name your replacement property.
The rule you elect determines how many properties you may identify, and how much risk you carry if one fails to close.
Three-Property Rule
Limit
Up to three properties, of any combined value.
Best Used For
The default. Concentrated, with the strongest control over diligence.
200% Rule
Limit
Any number, if combined value is no more than 200% of the property sold.
Best Used For
Building a diversified apartment portfolio, or hedging against a failed closing.
95% Rule
Limit
Any number, provided you acquire 95% of the value identified.
Best Used For
A fallback, rarely relied upon. In effect, a commitment to close on everything.
Exchange Structures
Four pathways, each with a different risk profile.
The right structure depends on whether you are selling first or buying first, whether the asset needs capital improvement, and how much control you wish to retain.
01 · Selling first, buying second
Forward (Delayed) Exchange
The standard structure. A qualified intermediary holds proceeds while you identify and acquire replacement property inside the statutory window.
Consider: Diligence is compressed under a hard deadline.
02 · Buying before you have sold
Reverse Exchange
An exchange accommodation titleholder holds either the replacement or the relinquished property under the safe harbor of Rev. Proc. 2008-16, within a 180-day parking period.
Consider: Capital or financing is required for both properties at once.
03 · Value-add and renovation
Improvement Exchange
Exchange proceeds fund improvements to the replacement property while a titleholder holds it, so the improved value counts toward the exchange.
Consider: Improvements must be completed within 180 days to count.
04 · Passive, institutional ownership
Delaware Statutory Trust (DST)
Fractional beneficial interests in a trust owning institutional multifamily, treated as like-kind real property under Rev. Rul. 2004-86. A useful backstop identification for investors leaving active management.
Consider: Illiquid, no control over hold period, sold only through licensed securities professionals.
The Murivest Mandate
One mandate. Every moving part of the exchange, governed.
We do not replace your tax counsel, your qualified intermediary or your licensed broker. We orchestrate them, and we bring the replacement asset.
01
Replacement Property Sourcing
Off-market and brokered multifamily opportunities screened against your criteria: value, debt replacement, submarket fundamentals and sponsor quality.
02
Deadline Governance
A day-by-day exchange calendar from the day we are engaged, with decision gates ahead of both deadlines so diligence never runs out the clock.
03
Intermediary & Counsel Coordination
We work alongside your qualified intermediary, tax counsel and licensed US brokers to align escrow instructions, assignments and closing mechanics.
04
Structuring Advisory
Forward, reverse, improvement and DST pathways weighed against your timing, leverage and control objectives, with trade-offs made explicit.
05
Cross-Border Principals
For non-US investors and family offices, we coordinate with specialist advisers on FIRPTA, entity structuring and home-country tax treatment.
06
Portfolio Sequencing
Multi-asset dispositions and acquisitions sequenced to preserve deferral, manage boot and serve your long-term allocation to US multifamily.
How We Engage
From confidential briefing to completed exchange.
01
Confidential Briefing
We establish the relinquished asset, expected gain, debt position and your objectives for the replacement portfolio, ideally before the sale is under contract.
02
Criteria & Mandate
Formal scope documentation, KYC/AML verification and a defined acquisition brief: markets, unit counts, vintage, leverage and hold period.
03
Sourcing & Screening
Opportunities are screened against the brief and presented with underwriting summaries, so your 45-day identification is a decision, not a scramble.
04
Execution Coordination
We align your qualified intermediary, counsel and licensed brokers through to closing, and track every deadline until the exchange is complete.
Risk Discipline
Where exchanges fail, and how we prevent it.
Most failed exchanges are not lost to complexity. They are lost to avoidable errors in timing, structure and documentation.
Boot
Cash received, or debt reduction not replaced with new debt or added equity, is taxable. Match or exceed both value and debt on the replacement side.
Constructive Receipt
Any access to sale proceeds, even briefly, disqualifies the exchange. Funds must remain with the qualified intermediary.
Related Parties
Exchanges with related parties carry a two-year holding requirement under §1031(f). Early dispositions can trigger the deferred gain.
Holding Intent
Both properties must be held for investment or business use. Property held primarily for resale, such as a flip, does not qualify.
Foreign vs US Property
Real property inside and outside the United States is not like-kind under §1031(h). Capital relocating into US multifamily should be planned accordingly.
State-Level Rules
Some states impose withholding or tracking obligations, and a few can claw back deferred gain if replacement property is bought out of state.
Institutional Enquiries
1031 Exchange into Multifamily: Frequently Asked Questions
Direct answers to the questions principals and their advisers ask first.
What is a 1031 exchange?
A 1031 exchange, named after Section 1031 of the Internal Revenue Code, allows an investor who sells real property held for investment or business use to defer capital gains tax by reinvesting the proceeds in like-kind real property. Since the Tax Cuts and Jobs Act of 2017, the provision applies only to real property.
Can I use a 1031 exchange to buy multifamily apartments?
Yes. Under the like-kind standard for real property, an investor may exchange into multifamily apartment buildings from almost any other investment real estate in the United States, including land, retail, office, industrial or other residential rental property, provided both properties are held for investment or business use.
What are the 45-day and 180-day deadlines?
The investor has 45 calendar days from the closing of the sale to identify replacement property in writing, and must complete the purchase within 180 days of the sale or by the due date, including extensions, of the tax return for that year, whichever comes first. Neither deadline can be extended except in limited federally declared disaster circumstances.
What is a qualified intermediary and do I need one?
A qualified intermediary, or QI, is an independent third party that holds the sale proceeds and facilitates the exchange documentation. A QI is effectively required for a delayed exchange because the investor cannot take possession of the funds. The QI must be engaged before the relinquished property closes.
How many properties can I identify?
Under the three-property rule you may identify up to three properties of any value. Under the 200% rule you may identify any number whose combined fair market value does not exceed 200% of the relinquished property. Under the 95% rule you may identify more, but you must acquire at least 95% of the value identified.
What is boot in a 1031 exchange?
Boot is any value received in the exchange that is not like-kind real property, typically cash or net debt relief. Boot is taxable to the extent of the gain realised. To defer all gain, the replacement property should be of equal or greater value, and equity and debt should be fully reinvested.
Can a 1031 exchange be used for a Delaware Statutory Trust?
Yes. Under IRS Revenue Ruling 2004-86, a properly structured Delaware Statutory Trust interest is treated as an interest in real property for 1031 purposes. DSTs are securities offered through licensed professionals, are illiquid, and give investors no control over the hold period.
Can non-US investors use a 1031 exchange?
Non-US persons may use a 1031 exchange when selling US real property and buying US replacement property, but FIRPTA withholding, entity structure and home-country tax treatment require specialist advice. Foreign real property and US real property are not like-kind to each other.
What happens if I miss a deadline or the exchange fails?
If the identification or closing deadline is missed, the exchange fails and the transaction is treated as a taxable sale. The gain, including depreciation recapture, becomes taxable in the year of sale. This is why replacement-property sourcing should begin before the relinquished property is under contract.
Is Murivest a tax adviser or a licensed US broker?
No. Murivest provides mandate-based commercial real estate advisory and sourcing, working alongside the investor's tax counsel, qualified intermediary and licensed US brokers on every transaction. Nothing on this page is tax, legal or investment advice.
Primary Sources
Important Notice
This page is general information and is not tax, legal or investment advice. Murivest is not a tax adviser, qualified intermediary or licensed US real estate broker, and works alongside the investor’s own advisers and licensed US professionals. DST interests are securities offered only by appropriately licensed firms. Tax law is subject to change; consult qualified counsel before acting.
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Engage Murivest
Your exit is a date. Your replacement should be a decision.
Whether you are exiting an asset or sourcing a multifamily replacement, begin with a confidential consultation. We will map the timeline and the opportunity set before your sale closes.