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What are the tax implications of selling a rental property and using the profits to purchase another rental property?

I have just sold a rental property and was thinking of reinvesting some of the profit into purchasing another rental property to avoid paying capital gains tax. Does the money need to be deposited into an escrow account or can I deposit into my existing savings account and just complete Form 8824 and identify three properties that I might be interested in purchasing within 45 days?

Banking, Real Estate, Taxes
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June 2018

Chamberlain, Michael

Sacramento Santa Cruz Silicon Valley Davis, CA

The process to avoid capital gains tax on the sale of a real estate property and the purchase of a new property is a process referred to as an 1031 exchange. 

The conditions of the exchange are very precise and if not adhered to 100%, tax will be due. The process can be reviewed at 


You should consult with a real estate attorney or 1031 facilitator ASAP since you did not provide all the information that would be needed. With the information that you did provide, the 1031 ship appears to have sailed, and you are not getting on the 1031 boat. You said that the sale has occurred. Too late for the exchange and you will be paying the cap gains tax. 

You should have asked to question prior to selling the property. 

June 2018