If you searched for 1031 exchange news, here is the short answer for 2026: nothing about Section 1031 changed. The One Big Beautiful Bill Act of 2025 left like-kind exchanges fully intact, there is still no dollar cap on how much gain you can defer, and the 45-day and 180-day deadlines still decide whether your exchange succeeds or fails. The headline is that there is no headline, and for real estate investors that is genuinely good news.
That said, "nothing changed" is not the same as "nothing to know." The law around 1031 exchanges keeps attracting proposals, a new companion provision for farmland sellers arrived in the same bill, and the IRS keeps disqualifying exchanges over paperwork and deadlines that have been the same for decades. This update covers what survived, what is new around the edges, and what a Florida investor should actually do with that information.
The One Big Beautiful Bill Act did not change Section 1031. Real estate investors can still defer capital gains tax by exchanging into qualifying like-kind real property, with no cap on the deferred gain, exactly as the rules have stood since the Tax Cuts and Jobs Act limited exchanges to real property. The deadlines are unchanged too: 45 days to identify replacement property and 180 days to close. Most failed exchanges are not killed by new laws; they are killed by missed deadlines, bad paperwork, and money touched by the wrong hands.
The news, in one table
| Question investors are asking | The 2026 answer |
|---|---|
| Did the One Big Beautiful Bill Act change 1031 exchanges? | No. Section 1031 was left intact, with the same rules in place since the Tax Cuts and Jobs Act. |
| Is there a cap on how much gain I can defer? | No. Full deferral remains available with no dollar limit under current law. |
| Is the 1031 exchange going away? | Not under current law. Caps and repeals have been proposed in past budgets, but none were enacted, and the 2025 tax law made no change. |
| What property qualifies? | Real property held for investment or business use. Personal property such as equipment and vehicles has not qualified since 2018. |
| Anything new nearby? | Yes: the same 2025 law created a separate tax-payment installment option for certain qualified farmland sales (new Section 1062), often confused with 1031 but not part of it. |
Why "no change" is the real story
Section 1031 has spent years on the list of proposed revenue raisers. Prior budget proposals would have capped deferrals, and a currently pending bill in Congress (H.R. 5336, introduced in late 2025) would cap deferred gain at $500,000 per year, though it has not advanced out of committee. That steady drumbeat is exactly why so many investors search for 1031 exchange news: the tool is too valuable to lose track of.
The 2025 tax law was the moment a change could have happened, and it did not. For planning purposes, that means the window is open, on the same terms investors have used for years. What it does not mean is that the window is guaranteed forever. Investors who have been sitting on highly appreciated property waiting for certainty have their answer for this cycle, and disciplined tax planning is how you use it while it lasts.
The rules that still decide everything
An exchange rarely fails because of the tax code's big ideas. It fails on mechanics. The framework is unchanged, which means the failure points are too.
Set up the exchange before you close
The money from your sale can never touch your hands or your account. A qualified intermediary must hold the proceeds, and the exchange must be in place before the sale closes, not after.
Identify within 45 days
You have 45 calendar days from the sale closing to identify replacement property in writing, following the identification rules. Weekends and holidays count. There are no extensions for ordinary circumstances.
Close within 180 days
The replacement purchase must close within 180 days of the original sale (or by your tax return due date with extensions, if earlier). The clock runs concurrently with the 45 days, not after it.
Match value and debt
To defer all the gain, buy replacement property of equal or greater value, reinvest all the proceeds, and take on equal or greater debt. Any cash or debt relief you keep is boot, and boot is taxable.
Document everything
Exchange agreements, identification letters, settlement statements, and correct reporting on Form 8824. Paperwork errors remain one of the most common reasons exchanges fail under audit.
Two areas the IRS watches closely have not relaxed. Exchanges involving related parties carry special holding rules and heightened scrutiny. And your primary residence still does not qualify: 1031 is for investment and business real property. A home can only enter the conversation in narrow situations, such as a property genuinely converted to rental use over time, which is planning to do with an advisor, not a workaround to improvise.
The new neighbor: a farmland deferral that is not a 1031
One genuinely new item travels alongside this topic. The 2025 law created new Section 1062 of the tax code, which lets sellers of certain qualified farmland who sell to a qualified farmer pay the resulting tax in four equal annual installments. Note the mechanics carefully: the gain itself is still recognized in the year of sale; it is the tax payment that spreads out. The provision applies to sales in tax years beginning after July 4, 2025, and it is already operational: the IRS has released Form 1062 for the election and, in Notice 2026-3, granted estimated-tax penalty relief for sellers who use it.
Two things matter about it. First, if you are a Florida landowner weighing a farmland sale, this payment schedule may change the math, and it deserves a look alongside a traditional exchange. Second, do not confuse it with a 1031: an exchange defers the gain itself, while Section 1062 only spreads the tax bill, and the eligible sellers and buyers are different. Which tool fits is a planning question that depends on your numbers, and it is exactly the kind of modeling our fractional CFO and tax team run for clients.
The Florida angle
Florida investors get the friendliest version of this landscape. There is no state income tax stacking on top of the federal deferral, and Florida real estate remains a market where investors regularly trade up: a duplex into a small multifamily, a tired rental into a triple-net commercial property, a lot into an income-producing asset. The deferred tax stays invested and compounding instead of leaving in April.
One caution for investors exchanging across state lines: some states claw back deferred gain when you exchange out of their jurisdiction and later sell. The federal answer and the state answer are not always the same, which is another reason to run the whole transaction, including the books and records behind it, through one coordinated team.
Frequently asked questions
No. The 2025 tax law preserved Section 1031 as it has stood since the Tax Cuts and Jobs Act. Like-kind exchanges of qualifying real property continue with full deferral and no dollar cap. The same law did create Section 1062, which lets certain farmland sellers pay their tax in installments, but that is a distinct provision, not a change to 1031.
Not under current law. Caps and repeals have been proposed repeatedly, and a pending bill (H.R. 5336) would cap annual deferrals at $500,000, but it has not advanced, and the 2025 tax law made no change to Section 1031. Because the idea keeps resurfacing, investors with large deferred gains should treat the current rules as an open window rather than a permanent guarantee.
Unchanged: 45 calendar days from your sale closing to identify replacement property in writing, and 180 days from that closing (or your tax return due date with extensions, if earlier) to close on the replacement. Both clocks run at the same time, and there are no extensions for ordinary circumstances.
No. Section 1031 applies to real property held for investment or business use, not your home. A primary residence uses a different benefit, the home-sale gain exclusion. In narrow cases a property converted to a genuine rental over time may later qualify for an exchange, but that is a planned transition with an advisor, not a same-year maneuver.
A structure where you acquire the replacement property before selling the old one, with an exchange accommodation titleholder parking one of the properties. It is permitted under IRS safe-harbor guidance, follows the same 45 and 180 day discipline in mirror image, and costs more to administer, so it is used when the right replacement property will not wait.
New Section 1062, distinct from Section 1031, lets sellers of certain qualified farmland who sell to a qualified farmer pay the tax on their gain in four equal annual installments. The gain itself is still recognized in the year of sale; only the payment spreads out. It applies to tax years beginning after July 4, 2025, and the IRS has issued Form 1062 and penalty-relief guidance. Farmland owners should compare both paths before choosing.
Sources
- Internal Revenue Service, Like-Kind Exchanges Under IRC Section 1031, and Form 8824 instructions, irs.gov.
- Internal Revenue Code Section 1031, as amended by the Tax Cuts and Jobs Act of 2017 (real property limitation).
- One Big Beautiful Bill Act of 2025 (Public Law 119-21), including the new qualified farmland tax-payment installment provision (IRC Section 1062); IRS Form 1062 and Notice 2026-3.
- Accruit and KLR (Kahn, Litwin, Renza) 2026 analyses of 1031 exchange status after the 2025 tax law.
The best 1031 news in years is that there is no news. The tool survived intact, the deadlines are the same ones investors have managed for decades, and the discipline that wins is unchanged: set up the exchange before closing, identify on time, close on time, and keep the paperwork airtight. SMAART helps Florida investors do exactly that, from the first model to the filed return. For the fundamentals, see our guides to the 1031 exchange in Florida and understanding the 1031 exchange.
Discussion
Comments
Leave a comment