1031 Exchange Planning for Southern California Investors
A properly structured 1031 exchange defers capital gains taxes when selling investment real estate — sometimes indefinitely. In California, where capital gains are taxed as ordinary income at up to 13.3%, the stakes on every sale are high. Timing, structure, and documentation all matter.
The 45-day identification window and 180-day closing deadline are absolute. Miss either and the exchange fails — and you owe taxes on the entire gain immediately. Most sellers focus on finding the replacement property and forget that the tax structuring is equally critical: boot calculations, debt replacement requirements, depreciation recapture, and California's clawback rule on out-of-state exchanges all affect your actual after-tax outcome.
1031 Exchange Planning — Full Scope
Pre-Sale Tax Modeling
Before you list the property, we model the full tax outcome — federal capital gains, California gains tax (no preferential rate), depreciation recapture, and net investment income tax — so you know exactly what you are working with.
Exchange vs. Sale Analysis
A 1031 exchange is not always the right move. We compare after-tax outcomes of an exchange, an outright sale with strategic loss harvesting, an installment sale, and a Qualified Opportunity Zone investment.
Qualified Intermediary Coordination
You cannot touch the proceeds. We coordinate with your QI to ensure exchange documents are structured correctly and proceeds flow in the right sequence to maintain exchange eligibility.
Boot and Debt Analysis
Cash boot and mortgage boot both trigger partial gain recognition. We calculate boot exposure before you close on the replacement property and structure the transaction to minimize recognized gain.
California Clawback Planning
If you exchange California property for out-of-state property, California can tax the deferred gain when you eventually sell — even if you have moved. We structure exchanges with this in mind.
Depreciation Basis Reset
After a 1031 exchange, your basis in the replacement property carries over from the relinquished property. We establish the correct basis and depreciation schedule to maximize future deductions.
Is This Right for You?
Plan the Exchange Before You List — Not After the 45-Day Clock Starts
Pre-sale modeling takes one meeting. Post-sale options are limited by deadline.