By Hans Goldstein, EA, enrolled agent, admitted to practice before the IRS · Updated
What are the key numbers for 1031 exchange alternatives in 2026?
| Number | Value | Primary source | As of |
|---|---|---|---|
| 1031 exchange deadlines | 45 days to identify and 180 days to receive replacement property; real property only | IRC 1031(a) | Read October 18, 2026 |
| Installment sale interest charge | Applies when installment obligations outstanding at year end exceed $5,000,000 | IRC 453A | Current law |
| Opportunity Zone window | 180 days from the sale; only the gain is invested | IRC 1400Z-2 | Read October 18, 2026 |
| Charitable remainder trust payout | 5% to 50% a year; term up to 20 years; remainder to charity at least 10% | IRC 664(d) | Read October 18, 2026 |
| Delaware statutory trust as replacement property | Treated as real property for a 1031 exchange | Rev. Rul. 2004-86 | Published ruling |
| Net investment income tax | 3.8% above $250,000 (joint) or $200,000 (single) of modified AGI | IRC 1411 | Thresholds not indexed |
| Federal estate tax basic exclusion | $15,000,000 per person for deaths in 2026 | Rev. Proc. 2025-32 | 2026 |
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We email you the numbers from this page (the gain and the federal, 3.8% and state pieces) with a one-page worksheet to fill in with your CPA: your gain line by line, the tax buckets, the 2026 thresholds and five questions to ask before you sign.
| Option | What it does to the tax | Where your money goes | Deadline | Main catch |
|---|---|---|---|---|
| Installment sale (IRC 453) | Gain is taxed as principal arrives; each year can sit in a lower bracket (2026 rates) | A note from the buyer, with interest, secured by the property | None; you set the note terms before closing | Buyer credit risk; recapture taxed in year one; interest charge on notes over $5,000,000 (IRC 453A) |
| Partial 1031 plus note on the boot (IRC 1031(b), 453(f)(6)) | Exchanges most of the value; the boot taken as a note is taxed as paid | Replacement property plus a seller note | 45 and 180 days for the exchange part | Still needs a replacement property; boot is taxable (see 1031 boot) |
| 721 UPREIT (IRC 721) | Defers the gain on real estate contributed to a REIT partnership | Operating partnership units | Usually follows a 1031 into a REIT-sponsored trust | Units are not real property, so no future 1031; redemptions are taxable |
| Delaware statutory trust (Rev. Rul. 2004-86) | Qualifies as replacement property, so a 1031 defers the gain | A fractional interest in managed real estate | The same 45 and 180 days | Sponsor fees, no say in the sale date, illiquid; offered to accredited investors only |
| Opportunity Zone fund (IRC 1400Z-2) | Defers the gain you invest; growth can be excluded after 10 years | A qualified opportunity fund | 180 days from the sale, for the gain only | Locked up; fund fees; 2026 investments have their deferral end December 31, 2026 |
| Charitable remainder trust (IRC 664) | Trust sells without paying tax; you are taxed as it pays you | The trust, paying you 5% to 50% a year | Before a binding sale | Charity gets the remainder (at least 10%); gift is irrevocable |
| Deferred sales trust | Marketed as an installment sale through a trust (IRC 453) | A trust that invests and pays you over time | Before you receive proceeds | Trustee fees; no IRS ruling; the trust must truly be independent |
| Hold until death (IRC 1014) | Basis resets to market value at death, so the built-in gain is never taxed | You keep owning the property | None | Market and management risk; estate tax above $15,000,000 per person in 2026 |
What are the best alternatives to a 1031 exchange?
There is no single best one. A 1031 exchange keeps the whole gain deferred but requires you to buy more real property, on deadlines, with all of the equity and the debt replaced (IRC 1031, 1031 exchange). The alternatives each give up something different. The table above is the short version; the pages below are the long ones.
- You want out of real estate and want cash to arrive over time: an installment sale. Compare the two directly in 1031 exchange vs installment sale.
- You owe tax only on part of the sale because of cash or debt relief: read 1031 boot. Boot paid on a note can be spread under Section 453(f)(6), so a partial exchange plus a note on the rest is a common mix.
- You want to keep real estate income without managing a building: a Delaware statutory trust as replacement property, and possibly a later 721 UPREIT exchange.
- You are willing to lock up the gain for years: an Opportunity Zone fund. See Opportunity Zone fund vs 1031 exchange.
- You give to charity anyway: a charitable remainder trust.
- Someone is marketing a trust to you: read deferred sales trust and deferred sales trust vs a direct installment sale before you pay a fee.
What if the exchange is already failing?
If you are inside the 180 days and cannot find a property, the options narrow fast. A failed exchange is taxable, but the intermediary agreement may let you report the gain when the money is released rather than at closing; see failed 1031 exchange.
A tenancy-in-common interest can be fast replacement property if you meet the conditions in Rev. Proc. 2002-22: tenancy in common 1031. If the loss was involuntary, such as a condemnation, Section 1033 gives longer reinvestment periods: Section 1033.
How do you decide between them?
Ask four questions in order. First, do you want to own real estate after the sale? If yes, stay with a 1031, a Delaware statutory trust or a 721 exchange.
Second, do you need the cash or income, or can you lock it up? An installment sale pays you; an Opportunity Zone fund and a trust both hold it. Third, who bears the risk: the buyer's credit in an installment sale, a sponsor in a Delaware statutory trust, or the market in a fund.
Fourth, what happens at death: heirs generally receive a basis step-up on property held until death (IRC 1014), but an installment note does not step up. Net the answers against a straight cash sale before choosing, using our capital gains tax calculator.
Do any of these work for selling a business instead of real estate?
Mostly no. A 1031 exchange and a 721 contribution reach real property only, so they cannot move goodwill or equipment. An installment sale, a charitable remainder trust and an Opportunity Zone fund do apply to business gain. See how to avoid capital gains tax when selling a business for the business version of this table.
What to know
Every alternative to a 1031 exchange trades the deadline and the replacement purchase for a different constraint: buyer credit in an installment sale, illiquidity in a fund or trust, a gift to charity, or giving up the cash entirely until death.
The two that leave you in cash with the most control are the installment sale and a partial exchange with a note on the boot. Compare net after-tax value over your own horizon, not the first-year tax alone.
Also free: the book Same Sale, Different Tax, the same $1,000,000 gain taxed ten ways. Want it run on your sale? Book a free scope call to see whether the Big Sale Tax Analysis is worth it.
Who you will talk to
Hans Goldstein · Sacramento, California
Hans Goldstein: Tax & Exit Planning, an independent practice. Enrolled Agent, admitted to practice before the Internal Revenue Service. CA Insurance License #4273294, NPN 20602398.
- What happens first
- You fill in the short form for a free scope call, about 5 minutes. Hans reviews every one personally and replies within 1 business day. If it is a fit, you get a link to book the call.
- The scope call
- Fifteen minutes, free: price, timeline, what you are selling and what the money is for. Scope means you hear whether the analysis is worth it for your sale.
- What you get
- A written side-by-side comparison of your cash-sale baseline against every path that fits, year-by-year numbers, a written recommendation, and a review meeting with you and, if you like, your CPA and attorney.
- What it costs
- The scope call is free. The Big Sale Tax Analysis is $5,000 per household per transaction, only if you decide it is worth it. No retainer, no hourly billing, no obligation to use any strategy.
- How Hans is paid
- The $5,000 fee pays for analysis only and is not reduced or credited if you buy anything. You are never required to buy anything. No referral fees are paid to or received from brokers, CPAs or attorneys. Hans is also a licensed insurance producer with a separately owned insurance business. That business is not part of this engagement, and the analysis does not recommend insurance products. If you later choose an installment sale funded through an insurance company, that company pays Hans a commission through his separate insurance business. He may be compensated by that business if you use an insurance-funded installment sale. Hans is an Enrolled Agent (EA), admitted to practice before the Internal Revenue Service. He is not a CPA, attorney or registered investment adviser; the analysis models tax effects and does not recommend specific securities. Read the disclosures.
Book a free scope call or call 213-340-2018. Hans answers or calls back the same business day.
Frequently asked questions
What can I do instead of a 1031 exchange?
Is an installment sale better than a 1031 exchange?
Can I combine a 1031 exchange with something else?
What is the downside of a Delaware statutory trust?
Do I have to pay tax if I sell a rental property and do not do a 1031?
Sources
- IRC 1031, like-kind exchanges (Cornell LII)
- IRC 453, installment method (Cornell LII)
- IRC 453A, interest on deferred tax (Cornell LII)
- IRC 721, nonrecognition on contribution to a partnership (Cornell LII)
- IRC 1400Z-2, Opportunity Zones (Cornell LII)
- IRC 664, charitable remainder trusts (Cornell LII)
- IRC 1014, basis from a decedent (Cornell LII)
- Rev. Rul. 2004-86, Delaware statutory trust (IRS)
- Rev. Proc. 2025-32, 2026 inflation adjustments (IRS)
Updated November 1, 2026. Education only, not legal or tax advice.
Keep comparing
1031 Exchange vs Installment Sale
A 1031 exchange defers all of the gain, but only if you buy like-kind real estate with all of the proceeds within 180 days and stay invested
ReadOpportunity Zone Fund vs 1031 Exchange
A 1031 exchange defers all of the gain on real estate, but you must reinvest all proceeds and replace the debt in like-kind property. An Opp
ReadDeferred Sales Trust vs a Direct Installment Sale
Both spread your gain under Section 453, so the tax math is the same. What differs is who owes you. In a direct installment sale your buyer
ReadDelaware Statutory Trust vs Deferred Sales Trust
They share a short name and nothing else. A Delaware statutory trust is real estate you buy as 1031 replacement property: all gain deferred
Read1031 exchange
Defer the whole gain by trading investment real estate for more real estate, if you can find it and close inside 180 days.
Read1031 boot
Cash out, debt not replaced, or a note from the buyer: how boot is taxed in a 1031, how mortgage netting works, and how to spread boot over time.
Read