D
enver‑based Jeff White and Suleyka Bolaños retired before 40 by swapping a struggling four‑plex for two stronger assets through a 1031 exchange. They sold the four‑plex, identified a single‑family home and a condo, and closed all three deals on the same day, paying no capital‑gain tax and boosting monthly cash flow from $400 to $1,700.

    A 1031 exchange lets investors defer capital‑gain taxes when they reinvest proceeds from a sale into a “like‑kind” property. The IRS requires the property to be an investment, not a primary residence, and the replacement must be of the same nature or character. After the sale, the investor has 45 days to identify up to three potential replacement properties in writing, and 180 days to close on one of them. Missing the 180‑day deadline can derail the exchange, as one investor reported.

    Nicole Shirvani, a full‑time psychiatrist and single mother, moved from Oregon to Florida in 2022. She traded her Oregon duplex for a beachside condo and a single‑family home, then added two short‑term rentals in the Shenandoah Valley and a triplex in Lakeland. Shirvani advises identifying replacement properties before listing the current one to avoid being stuck with proceeds that can’t be reinvested.

    Zeona McIntyre, author of “30‑Day Stay,” began investing in her 20s without qualifying for a mortgage. She financed a one‑bedroom condo in Boulder with private lending, later used a home‑equity line of credit to buy a second property, and then swapped it for a quad‑plex via a 1031 exchange. McIntyre explains that while the exchange defers taxes, the tax burden can be passed on to heirs, effectively eliminating it upon death.

    Key points of a successful 1031 exchange:

    1. **Property type** – Must be an investment, not a primary home.

    2. **Like‑kind** – Same nature or character, per IRS definition.

    3. **Timeline** – 45 days to identify replacement(s); 180 days to close.

    4. **Tax deferral** – Capital gains are postponed, not eliminated; can be repeated indefinitely.

    5. **Portfolio growth** – Enables reinvestment in higher‑yield properties, improving cash flow and diversification.

    By leveraging 1031 exchanges, these investors turned modest rentals into lucrative assets, accelerated retirement, and built resilient portfolios.