1031 Exchanges 2019-01-28T22:09:03+00:00


Many realtors have a vague understanding of the 1031 Exchange. That is not the case with Tom and Mike Connolly of Landlord Real Estate. Combined they have performed over a dozen exchanges for themselves personally, and countless more for their landlord clients.



When you sell your rental, the IRS is going to tax you approximately 35% on your capital gains, which is simply the difference between what you sell the rental for (less selling costs) and what you originally paid for the property (plus improvements). That’s a lot of money and there’s no reason to pay the government if you don’t have to.

2 SECTION 1031

But fear not – Section 1031 in the U.S. tax code allows you to sell your rental property and re-invest in another piece of rental property (any type, anywhere in the U.S.) without paying taxes.

3 Keep Your Money

This allows you, the investor to “postpone” paying taxes for your lifetime. When you pass, your property’s tax basis will be “stepped up” to fair market value, allowing your heirs to hold or sell the property with no tax consequences!


Landlord Real Estate is the only East Bay residential real estate company to have COSTAR. This is a very expensive, subscription-only commercial real estate database typically reserved for commercial brokers. Costar allows us to identify potential 1031 properties anywhere in California. This includes every apartment, shopping center, office building, warehouse and land parcel in the state that is both for sale and not for sale. If anyone can find you a replacement rental property, we can. Real estate empires have been created in this manner. The investor starts with a rental home and parlays the purchase into bigger and bigger real estate investments.

A Typical 1031 SCENARIO

  1. The owner of a 4 bedroom home in Fremont is renting it for $3,100 per month.
  2. He gives the tenant notice and sells the home for $930,000.
  3. The entire net proceeds are held by a qualified intermediary (approved by the IRS) who holds the funds for the owner.
  4. The owner then identifies and purchases a six plex is Sacramento for $1,200,000, only now the rents are $7400 per month… essentially doubling the return on investment (or Cap Rate).