Investor Guide | 1031 + New Construction

Can New Construction Homes and Condos Qualify for a 1031 Exchange in 2026, and When Does the CO Matter

On the Gulf Coast, new construction has a particular pull. A clean elevation, fresh systems, modern building standards, and finishes chosen with intention. I see investors drawn to new builds in Orange Beach and near Ono Island, especially when they are thinking long-term holds and want a lower-maintenance path to ownership.

The question I hear most in that moment is direct: can a brand-new home or a new condo qualify as replacement property in a 1031 tax-deferred exchange, and does the certificate of occupancy (CO) have to be issued for it to “count.”

Quick answer: yes, new construction can qualify

Yes. New construction homes and condos can qualify for a 1031 exchange as long as the real estate is held for investment or business purposes and you follow the 1031 rules and deadlines. 

1031 treatment is for real property held for business or investment (not a personal-use home). The “why you own it” matters as much as what it is. 

The deadlines that control your new-construction plan

New construction is not disqualified by being new. It is disqualified by missing the clock. In a delayed exchange, you generally have:

• 45 days to identify the replacement property after you transfer the relinquished property 
• 180 days to receive the replacement property (or earlier if your tax return due date arrives first, unless extended) 

That “receive” language is the hinge. If the home or condo will not be conveyed to you by the end of the exchange period, it cannot serve as your replacement property in a standard delayed exchange. 

Three ways investors exchange into new construction

So, does the property need a CO to qualify for a 1031 exchange

Here is the clean way I explain it.

• The IRS rule is about being “received” on time, not about a CO. The exchange rules focus on identifying on time and receiving the replacement property within the exchange period. 
• The CO is usually a local, practical requirement for closing and for true usability. Many lenders and many jurisdictions treat the CO (or a temporary CO) as part of what makes a dwelling ready for occupancy and therefore ready to close and operate. For “placed in service” concepts (depreciation and deductions), being ready and available for its intended use is the key idea, and a CO is often strong evidence of that readiness.
• Bottom line: if the builder or developer cannot convey the property to you until the CO is issued, then in real-world exchange planning the CO effectively needs to happen early enough for you to close within the 180-day window. 

What investors should know about “to-be-built” and pre-construction condos

This is where investors get surprised.

• If you close on a partially completed property in a standard delayed exchange, the exchange “counts” only for what exists at closing. Work completed after the exchange period generally does not help you meet the “equal or up” replacement value goal, because it was not received during the exchange period. 
• If you want the construction value included, you typically need an improvement (build-to-suit) exchange structure. That is the approach discussed in 1031 improvement exchange planning, often pairing the exchange with an EAT safe harbor arrangement under IRS guidance.
• Pre-construction condos are especially timing-sensitive. If the unit cannot be legally conveyed (often tied to CO and condominium readiness milestones), you may run out of exchange time even if the deal “feels close.” 

My 2026 checklist before you identify new construction in a 1031

• Ask for a realistic CO timeline in writing, and then build buffer around it.
• Confirm the earliest possible closing date and whether a temporary CO can support closing if needed.
• Have at least one backup replacement plan inside your 45-day identification list in case construction delays.
• Coordinate early with your qualified intermediary (QI) about whether an improvement exchange structure is appropriate. 
• Underwrite beyond the purchase price: insurance, HOA rules, long-term rental restrictions, reserves, and ownership costs that are especially relevant on the coast.

Important disclaimer: This is general information, not tax or legal advice. Meredith Folger Amon and Bellator Real Estate are not reliable for the content above and make no guarantees about tax outcomes. 1031 exchanges are fact-specific and deadline-driven. Your qualified intermediary, CPA, and attorney should confirm your specific plan, including CO and closing requirements in the applicable jurisdiction. 


#searchthegulf #meredithamon #becausewelivehere 


SEARCH ORANGE BEACH REAL ESTATE LISTINGS FOR SALE

• All Listings
• $200,000 - $300,000
• $300,000 - $400,000
• $400,000 - $500,000
• $500,000 - $600,000
• $600,000 - $700,000
• $700,000 - $800,000
• $800,000 - $900,000
• $900,000 - $1,000,000
• Over $1,000,000

Bedrooms

Bathrooms

Price Range

Save Search

Sort by:

Price, high to low

$6,500,000

29924 Burke Lane, Orange Beach

7 Beds 9 Baths 8,850 SqFt Residential MLS® # 390361

$5,895,000

27304 Gulf Road Unit A, Orange Beach

4 Beds 6 Baths 4,154 SqFt Residential MLS® # 386392

$5,895,000

27304 Gulf Road Unit B, Orange Beach

4 Beds 6 Baths 4,154 SqFt Residential MLS® # 386394

$5,495,000

26628 Perdido Beach Boulevard Unit 1, Orange Beach

6 Beds 8 Baths 4,298 SqFt Residential MLS® # 389930

New

$5,439,000

30977 Peninsula Drive, Orange Beach

5 Beds 7 Baths 4,965 SqFt Residential MLS® # 391767

$5,350,000

26618 Perdido Beach Boulevard Unit 2, Orange Beach

6 Beds 8 Baths 4,450 SqFt Residential MLS® # 377332

$5,300,000

31292 River Road, Orange Beach

6 Beds 7 Baths 4,718 SqFt Residential MLS® # 360051

$4,750,000

26350 Perdido Beach Boulevard Unit C2902, Orange Beach

4 Beds 5 Baths 4,756 SqFt Residential MLS® # 373609

$4,600,000

23150 Perdido Beach Boulevard Unit 2, Orange Beach

10 Beds 10 Baths 5,278 SqFt Residential MLS® # 377811

$4,400,000

24638 Cross Lane, Orange Beach

8 Beds 8 Baths 4,252 SqFt Residential MLS® # 386779

$4,390,000

23150 Perdido Beach Boulevard, Orange Beach

5 Beds 6 Baths 3,488 SqFt Residential MLS® # 378523

$4,200,000

33202 River Road, Orange Beach

4 Beds 5 Baths 4,943 SqFt Residential MLS® # 351716

1 2 3 4 72

Next




By Meredith Folger Amon | February 14, 2026

Ono Island Bridge Clearance and Canal Access: How to Choose the Right Waterfront Home for Your Boat

Ono Island Bridge Clearance and Canal Access: How to Choose the Right Waterfront Home for Your Boat
If you are shopping Ono Island waterfront homes, bridge clearance and canal access can matter as much as bedroom count. I see buyers fall in love with a dock photo, then realize the route…

By Meredith Folger Amon | February 14, 2026

Ono Island Seawall and Dock Due Diligence: What to Check Before You Buy a Waterfront Home

By Meredith Folger Amon | February 13, 2026

Ono Island Buyer Due Diligence Checklist: The Questions That Protect Your Purchase and Your Waterfront Lifestyle

By Meredith Folger Amon | February 13, 2026

Ono Island Waterfront Homes with Pools | SearchTheGulf.com