1031 Exchanges in Multifamily & Industrial
Learn how 1031 exchanges can defer taxes and grow wealth with multifamily and industrial properties. Explore timelines, rules, and current opportunities.
Why 1031 Exchanges in Multifamily & Industrial
A like-kind exchange (IRC §1031) lets investors defer capital gains taxes by exchanging into new income-producing real estate. Multifamily and industrial assets often pair strong demand with durable cash flows—ideal for long-term compounding and estate planning.
Multifamily Benefits
- Broad renter demand & historically resilient occupancy
- Potential for value-add renovations & NOI growth
- Diversified tenant base reduces single-tenant risk
Industrial Benefits
- Logistics & e-commerce tailwinds; mission-critical locations
- Longer leases; lower TI/CapEx than office or retail
- Flexible formats: small-bay, last-mile, light manufacturing
Tax Deferral, Repositioning
- Defer capital gains, depreciation recapture, and NIIT*
- Trade up into better markets & asset quality
- Potential step-up in basis for heirs**
* Consult your tax advisor. ** Estate planning outcomes vary.
How a 1031 Exchange Works
- Sell Relinquished Property. Engage a Qualified Intermediary (QI) before closing.
- Identify Replacements (45 Days). Use the 3-Property, 200%, or 95% rules.
- Acquire (180 Days). Close on one or more identified properties within 180 days of sale.
- Match Value & Debt. Reinvest equal or greater value and replace equal or greater debt (or add cash).
- Document & Report. Work with your CPA on Form 8824 and basis tracking.
Eligible Properties (Like-Kind)
Most U.S. real property held for investment or productive use qualifies as like-kind to other U.S. investment real property.
- Multifamily: garden, mid-rise, workforce housing
- Industrial: small-bay, last-mile, distribution, flex
- Ground leases, land for development (with considerations)
Personal residences, flips, and REIT shares generally do not qualify.
Exchange Readiness Checklist
- Engage a Qualified Intermediary (QI) prior to closing your sale
- Confirm entity structure & signatory authority
- Define target markets, returns, and risk profile
- Line up debt quotes and gather financials
- Prepare identification strategy (3-Property / 200% / 95%)
1031 Exchange FAQs
A 1031 exchange allows you to defer capital gains taxes by exchanging investment real estate for other like-kind investment real estate, following strict IRS timelines and rules.
You have 45 days from the sale of your relinquished property to identify replacement properties and 180 days to close on them. Both windows run concurrently.
Yes. Investment real property is generally like-kind to other investment real property. Multifamily and industrial are common choices for income durability and growth.
To fully defer taxes, you generally must purchase equal or greater value and replace equal or greater debt (or add cash). Shortfalls can trigger taxable “boot.”
If you miss identification or closing deadlines, the exchange typically fails and taxes may be due. Work with your QI and advisory team early to stay on track.
Delaware Statutory Trusts (DSTs) and Tenancy-in-Common (TIC) interests can be used as replacement property in some cases. Suitability depends on your goals and risk tolerance.
Start Your 1031 Strategy with Wangard
Share your target markets, timeline, and exchange size—we’ll curate multifamily and industrial options that align with your objectives.
This material is for informational purposes only and not tax or legal advice. Consult your advisor.
Book A Meeting
Why is a diversified portfolio important?
If you’re ready to achieve a higher return from your investment portfolio, it’s time to diversify it with real estate. Our approach to commercial real estate investments provides our investors with everything they need to make smart, informed investment decisions: sustainable long-term development solutions, quality buildings filled with quality tenants, unmatched service based on trust, and prime locations throughout the greater Milwaukee area. Give us a call at 414-777-1200 to discuss how together we can build a stronger real estate investment portfolio.
Nicholas Ganos, MBA
Director of Investor Relations