Episode 178: Forwards and Reverse 1031 Exchanges with Sara Remley from IPX1031
Summary
Taxes, taxes and more taxes! Depending on where you are depends on what you pay taxes on, and how much, and all that….and then five minutes later it changes. In Canada, when you sell a property, you pay capital gains taxes, period. But, in the US, there is a tax strategy that allows you to pay capital gains,....but later. But did you know that if you are a Canadian who owns property in the US, you can use this tool in the US as well. This is known as a 1031 exchange, but did you know there is such a thing as a REVERSE 1031 exchange? Here to untangle this tangled and technical tax talk is 1031 expert Sara Remley from IPX1031.
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This Week’s Blog Post:
What Is a 1031 Exchange?
Hi friends! I’m Dr. Jen, and in this episode of My Life as a Landlord, I sat down with Sara Remley from IPX1031 to talk about one of the most powerful wealth-building tools available to U.S. real estate investors—the 1031 exchange. While Canadian landlords don’t have an equivalent option yet, this conversation is packed with lessons about strategy, timing, and long-term planning. Sara has been working in 1031 exchanges for over 20 years, and she joined me to break down how they work, what mistakes to avoid, and how forward and reverse exchanges can help landlords grow their portfolios.
The Basics of a Forward Exchange
Sara explained that a 1031 exchange lets investors defer capital gains taxes when selling investment property—as long as they reinvest in another “like-kind” property of equal or greater value. The idea is simple: rather than paying taxes immediately, landlords can use 100% of their equity to keep building wealth. The process, however, has strict timelines. Once you sell a property, you have 45 days to identify your replacement property and 180 days to complete the purchase. The rules sound simple, but the clock and cash management can be stressful. Sara advises landlords to plan ahead, getting both contracts—the one for the sale and the one for the new purchase—lined up early to avoid scrambling.
Clearing Up the “Like-Kind” Myth
One of the biggest misconceptions about 1031 exchanges is that you must trade “house for house” or “land for land.” Sara cleared that up: “like-kind” refers to the purpose of the property, not its type. You can sell a rental home and buy a commercial building, or sell land and purchase an income-producing property. The key is that both must be held for investment purposes. This flexibility allows investors to diversify or consolidate, selling multiple properties to buy one larger asset—or the other way around.
The Reverse Exchange Solution
We also discussed the reverse 1031 exchange, which Sara calls “the deep end of the pool.” It flips the traditional process, letting investors buy first and sell later. This solves the biggest problem in forward exchanges: finding the next property in time. In a reverse exchange, a qualified intermediary creates a temporary holding company to buy and hold the replacement property on the investor’s behalf until the sale is complete. It’s more complex and expensive than a standard exchange but gives investors control and flexibility. Sara emphasized that these must be set up before closing, and that professional guidance is critical since the IRS requires the involvement of a third-party facilitator.
Advanced Strategies and Final Thoughts
Sara and I wrapped up with advanced strategies like “double dipping,” where investors combine primary home exemptions with 1031 deferrals, and estate planning uses, where parents buy properties their children will eventually inherit. She also discussed Delaware Statutory Trusts—fractional ownership structures that qualify for 1031 exchanges while providing passive income. Her biggest advice? Don’t wait until closing to ask about a 1031. It must be in place before the sale, or the opportunity is lost.
I recorded this episode in Maui, Hawaii. Why? Because real estate takes you places. Where do you want real estate to take you? Join me next week for Episode 179, where business efficiency expert Sydney Young returns to talk about remote onboarding and automated landlord systems. I’ll see you there!