A 1031 Exchange, is a transaction under United States law, which specifies that if some sort of real estate asset is sold and the proceeds of the sale are then reinvested in an asset of a similar kind, then no capital gain or loss is recognized, allowing the deferment of capital gains taxes.

The seven rules to qualify as an exception for a 1031 Exchange are:

1. Property owners must have the property registered in their name or a corporation’s for at least a year and a day.
2. Property owners must identify 3 possible properties to exchange by the 45^th day following the sale of property.
3. Property owners must issue the deed to the new property within 180-days following the sale of the original property.
4. The new property must be registered in the same manner as the original, that is to say, if the original property was registered in the name of an individual or a corporation then the new one must be registered in the same way
5. The transaction requires qualified intermediaries (attorneys, accountants, brokers)
6. All the proceeds from the original property sale must be re-invested in the new property.
7. If the original property is located in the US it must be exchange for another property in the US. In the same way, if the property is located abroad, it must be exchange for another property abroad.

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