Question 1

What is the downside of a 1031 exchange?

Accepted Answer

While exchanges defer taxes, they reduce liquidity and impose strict IRS deadlines. Missing the 45-day identification or 180-day purchase deadlines can disqualify the exchange and trigger immediate tax liability.

Question 2

How to avoid Connecticut capital gains tax on sale of home?

Accepted Answer

For a primary residence, homeowners may qualify for the Section 121 home-sale exclusion (up to $250,000 for individuals or $500,000 for married couples). Investment properties are not eligible but may qualify for deferral under a 1031 exchange if reinvested in like-kind real estate.

Question 3

What is the 2-year rule for 1031 exchanges?

Accepted Answer

This informal guideline suggests that holding a property for at least two years helps demonstrate investment intent, strengthening compliance under IRS scrutiny.

Question 4

What is the 90% rule for 1031 exchanges?

Accepted Answer

The 90% rule applies to certain reverse exchanges, requiring that the replacement property's value must be at least 90% of the relinquished property's sale price to maintain full tax deferral.

1031 Exchanges in Connecticut

First American Exchange Experts in Connecticut

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