1031 Exchange

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A 1031 exchange — named for Section 1031 of the Internal Revenue Code — lets an investor defer capital-gains tax by reinvesting the proceeds from the sale of an investment property into another "like-kind" investment property, following strict IRS identification and closing timelines.

1031 exchanges are governed by federal tax law and apply to Idaho investment property. A qualified intermediary must hold the proceeds between the sale and the purchase so the investor never takes constructive receipt of the funds. Kootenai Title & Bonner Title can coordinate the title and escrow side of a 1031 exchange.

A 1031 exchange is one of the most powerful tools available to real estate investors, allowing capital-gains tax to be deferred when one investment property is swapped for another of like kind. The rules are strict — a qualified intermediary must hold the funds, replacement property must be identified within 45 days, and the purchase must close within 180 days. Coordinating title and escrow correctly is essential to a clean exchange.

Source: 26 U.S.C. § 1031 (IRS)

• Escrow
• Closing
• Title Insurance

Reviewed by Kootenai Title & Bonner Title Editorial Team · Last updated June 19, 2026
This definition is educational and not legal advice. See our Editorial Policy.