1750 Kalakaua Avenue • Honolulu, Hawaii 96826 • (808) 941-8711


What is a 1031 tax-deferred exchange? Basically, it allows you to sell investment real estate and defer payment of Capital Gains Tax by purchasing qualifying "like kind" property.

Normally, when you sell property you are taxed on any gain you realize. Section 1031 of the Internal Revenue Code provides a way for people to reinvest gain from the sale of real property without paying taxes at the time of the qualifying reinvestment. Taxes are deferred until the ultimate sale of investment property without qualifying reinvestment. At that time, the deferred gain, along with any additional gain, is subject to tax.

Since taxes are merely deferred, not eliminated, you might wonder why an investor would bother with a 1031 exchange. The primary reason is usually to have more money available to invest in another property. It's kind of like the government is lending you money, interest free, equal to the taxes you would have paid.

Now, like most things involving taxes, there a number of technical requirements, guidelines and procedures that must be followed. Since these can be confusing and each exchange scenario varies, it is best to work with a Realtor and Facilitator who have a lot of experience in 1031 exchanges. Ira Gordon, owner and principal broker for Aloha Homes, has served as president of The Investment Group of Realtors (TIGR) and three times been selected Hawaii Exchanger of the Year (which is for interesting and innovative exchanges).

If you are interested in 1031 tax-deferred exchanges please contact Ira at (808) 941-8711 or email.

For more information on rules and examples of actual exchange scenarios, click on the following links:

  • 1031 Rules - Some of the technical requirements, guidelines and procedures that must be followed in 1031 exchanges


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