What Is a 1031 Tax-Deferred Exchange? Learn the Advantages on the Gulf Coast
By Meredith Amon, Licensed in Alabama and Florida
"Guided by Integrity. Backed by Experience. Search the Gulf with Meredith Amon."
www.searchthegulf.com
If you’ve been investing in real estate or considering upgrading your Gulf Coast portfolio, you may have heard about a 1031 tax-deferred exchange. It’s a powerful tool that allows you to defer capital gains taxes when selling one investment property and purchasing another—but only if it’s done the right way.
Whether you own rental property, vacant land, or a second home used as an investment, a 1031 exchange could help you grow your portfolio more efficiently.
What Is a 1031 Tax-Deferred Exchange?
A 1031 exchange, named after Section 1031 of the IRS code, allows you to sell an investment or business-use property and defer the capital gains taxes—as long as you reinvest the proceeds into another like-kind property.
"Like-kind" doesn’t mean identical. It simply means real estate held for investment or productive use—so you can exchange a condo for a duplex, a single-family home for land, or even commercial for residential property.
To qualify:
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Both properties must be held for investment (not personal use)
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A Qualified Intermediary (QI) must handle the transaction
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You must identify the new property within 45 days of closing
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You must close on the new property within 180 days
Gulf Coast Advantages of a 1031 Exchange
Here along the Alabama and Florida Gulf Coast, I often work with buyers and sellers looking to reposition their investments—many of whom use a 1031 exchange to do it.
Here’s how it can work in your favor:
1. Upgrade or Diversify
Sell a dated property in a low-growth area and exchange into new construction, waterfront, or boater-friendly property with better rental potential or long-term appreciation.
2. Consolidate or Relocate Assets
Own several lots or small rentals? You can exchange them into one larger, easier-to-manage income-producing property on Ono Island, Orange Beach, or Perdido Key.
3. Defer Taxes, Increase Cash Flow
By deferring capital gains, you keep more money in your next purchase—boosting your buying power and increasing potential cash flow from rents or appreciation.
4. Preserve Wealth Across Generations
1031 exchanges allow investors to defer taxes indefinitely if structured properly. When a property is inherited, it receives a step-up in basis—potentially eliminating the deferred tax liability.
Local Expert Contact: Herbert Law Firm LLC
When considering a 1031 exchange, it’s critical to work with a legal professional who understands local and federal guidelines.
One trusted local resource I recommend is:
HERBERT LAW FIRM LLC
JULE HERBERT
218 Professional Court
Gulf Shores, AL 36547
(251) 968-4764
Jule Herbert and his team are experienced in 1031 exchanges and work with both individual investors and real estate professionals throughout Baldwin County and the Gulf Coast.
My Role as Your Real Estate Advisor
If you're looking to identify a 1031 replacement property, I can help you:
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Pinpoint eligible listings that meet the exchange timeline
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Understand rental and investment potential
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Coordinate with your intermediary and legal counsel
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Navigate POA, zoning, and insurance considerations for Gulf-front, canal, and boater-access properties
Let’s make your transition smooth, strategic, and tax-savvy.
Email: meredith@searchthegulf.com
Explore Gulf Coast Investment Properties
Meredith Amon is a Gulf Coast Expert Real Estate Advisor, licensed in Alabama and Florida. She specializes in helping buyers and sellers navigate the buying and selling of homes along the Gulf Coast, with a focus on investment strategy, 1031 exchanges, and waterfront properties.
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