Selling an investment property in Longmont and thinking about rolling the gains into something bigger or more passive in Niwot? A 1031 exchange can help you defer federal capital gains taxes, but only if you follow strict IRS rules and timelines. You want clarity, not jargon, so you can make a confident move without risking a tax surprise. In this guide, you’ll learn how 1031 exchanges work, the 45/180-day deadlines, common replacement options around Longmont and Niwot, and a simple checklist to keep you on track. Let’s dive in.

What a 1031 exchange is

A 1031 exchange lets you defer federal capital gains tax when you sell real property held for investment or business use and purchase other like-kind investment real estate within a qualifying structure. For U.S. real property, most investment real estate is considered like-kind to other real estate. Your personal residence and property held as inventory for sale do not qualify.

You must follow the same taxpayer rule. The taxpayer that sells the relinquished property must also acquire the replacement property. A qualified intermediary, or QI, typically holds your sale proceeds and prepares exchange documents so you do not take constructive receipt of funds.

If you receive cash or non–like-kind property, that portion is taxable and is called boot. A reduction in mortgage debt between the relinquished and replacement property can also create taxable mortgage boot.

The 45/180-day deadlines

Two hard deadlines drive every 1031 exchange, and they start on the day you transfer your relinquished property:

• Identification period: You have 45 days to identify replacement properties in writing and deliver that identification to your QI or another permitted party. No ordinary extensions are available. IRS guidance on like-kind exchanges outlines these rules.
• Exchange completion period: You have 180 days from the transfer date to receive the replacement property and transfer title, or the due date of your tax return for that year, if earlier. The 180-day window runs at the same time as the 45-day identification window.

Only narrow exceptions, such as presidentially declared disasters, can affect timing. Plan to meet both windows.

Identification rules you can use

You must identify replacement property in writing, sign it, and provide a clear description such as an address or legal description. Most investors use one of three tests:

• Three-property rule: Identify up to three properties, regardless of value.
• 200% rule: Identify any number of properties as long as their total fair market value does not exceed 200% of your relinquished property’s value.
• 95% exception: Identify more than three and over 200% in value, but you must acquire at least 95% of the total identified value. This is strict and less common.

Because the 45-day clock is tight, many investors pre-vet multiple options with their broker and QI before listing the property for sale.

Replacement options in Longmont and Niwot

The Longmont and Niwot area of Boulder County offers a mix of small multifamily, single-tenant net-lease, and access to fractional structures such as DSTs. Zoning, supply, and Niwot’s historic character can shape fit and feasibility, so factor local regulations into your plan.

Small to mid-sized multifamily

Many local investors trade into 2 to 20-plus unit buildings for cash flow and value-add potential. You can renovate units, adjust rents as leases roll, and manage locally or hire a manager. Check rent and vacancy trends, building systems, tenant ordinances, and parking or utility constraints. Pros include familiar operations and financing access. Cons include hands-on oversight and potential capital expenditures.

Single-tenant NNN properties

In a triple net lease, tenants pay taxes, insurance, and maintenance, which reduces your workload. Typical tenants include national retailers or credit tenants. Learn the basics in this overview of net lease structures. Pros include stable income, long lease terms, and low active management. Cons include single-tenant income concentration and dependence on tenant credit. In smaller submarkets like Niwot, you may find suitable NNN options nearby along regional corridors.

Delaware Statutory Trusts (DSTs)

DSTs allow you to purchase a fractional beneficial interest in an institutional property as a 1031 replacement. The IRS affirmed DST eligibility for like-kind treatment in Revenue Ruling 2004-86. DSTs are typically passive with fixed management and limited investor control. Many offerings are private placements that may require accredited investor status; review the SEC’s criteria for accredited investors.

Pros include passive ownership and access to larger assets or geographic diversification. Cons include illiquidity, sponsor risk, and limited control. DSTs are often not local, so you trade hands-on oversight for simplicity.

Step-by-step process

Here is the standard flow for a non-simultaneous 1031 exchange:

1. Pre-sale planning
   • Confirm goals and feasibility of a 1031 with your tax advisor.
   • Decide on your ownership structure for both sale and purchase.
   • Engage a qualified intermediary before your sale closes.
2. Sell the relinquished property
   • Proceeds go directly to the QI, not to you.
   • The transfer date starts the 45/180-day clocks.
3. Identify replacement properties within 45 days
   • Use the three-property rule, 200% rule, or 95% exception.
   • Deliver clear, written identification to your QI.
4. Complete due diligence and close within 180 days
   • Inspect, secure financing, and coordinate closing with your QI.
5. Report the exchange
   • Work with your tax preparer to file IRS Form 8824 for the tax year of the exchange.

Pitfalls to avoid

• Missing the 45-day identification or 180-day closing deadlines.
• Taking constructive receipt of funds instead of using a QI.
• Vague or incorrect property identification.
• Receiving cash or non–like-kind property that creates taxable boot.
• Reducing your mortgage debt and triggering mortgage boot.
• Violating the same taxpayer rule by switching ownership entities mid-exchange.
• Entering related-party exchanges without understanding holding requirements.

Simple 1031 checklist

• Before listing
  • Confirm 1031 suitability with your CPA or tax advisor.
  • Select and contract a qualified intermediary.
  • Choose acceptable replacement types and target geographies.
• At sale
  • Execute the exchange agreement and route proceeds to the QI.
  • Note your transfer date to start the 45/180-day timeline.
• During the first 45 days
  • Identify properties in writing under the three-property, 200% rule, or 95% exception.
  • Begin financing and due diligence.
• Between day 45 and day 180
  • Negotiate and sign purchase contracts for identified properties.
  • Monitor financing to maintain or exceed prior debt to avoid mortgage boot.
• At closing
  • Use QI-held funds and confirm exchange documents align with closing documents.
• After the exchange
  • Keep records and have your preparer complete Form 8824 and any Colorado filings.

For questions about state conformity and filing, review resources from the Colorado Department of Revenue.

Example identification scenario

You sell a Longmont fourplex and start a 1031 exchange. Within 45 days, you identify three options under the three-property rule: a Niwot duplex, a single-tenant NNN asset in a nearby corridor, and a DST interest. You perform due diligence on all three so you have fallback options. By day 120, you close on the NNN property, which meets your passive income goal. Your QI wires funds at closing, and your tax preparer reports the exchange on Form 8824.

Work with a local partner

In Boulder County’s tight, design-forward market, you benefit from a focused strategy and disciplined execution. The Patrick Brown Group pairs high-touch buyer and seller representation with data-driven market analysis and boutique-level coordination, so you can source, evaluate, and secure the right replacement property on time. We collaborate with your CPA and qualified intermediary to keep your sale and purchase aligned with your 1031 plan, and we manage the negotiations, marketing, and closing details across both sides of the trade.

If you are weighing a 1031 move in Longmont or Niwot, let’s talk about your goals and shortlist the best options for your timeline and risk profile. Start the conversation with the Patrick Brown Group.

FAQs

What is a 1031 exchange for real estate investors?

• A 1031 exchange allows you to sell investment or business real estate and reinvest the proceeds into like-kind real property while deferring federal capital gains tax, if you meet IRS requirements.

How do the 45-day and 180-day deadlines work in a 1031?

• You must identify replacement properties in writing within 45 days of transferring your relinquished property and close on replacement property within 180 days of that date.

Can I exchange my Longmont rental for property outside Colorado?

• Yes, U.S. investment real property is generally like-kind to other U.S. real property, so you can exchange into out-of-state assets if you meet the rules.

Do I need a qualified intermediary for a 1031 exchange?

• In most deferred exchanges, a QI is essential to hold proceeds and prepare exchange documents so you do not take constructive receipt of funds.

What is a Delaware Statutory Trust (DST) in a 1031?

• A DST is a fractional ownership structure that can qualify as like-kind replacement property; it offers passive ownership but has limited control and potential accreditation requirements.

How do I report a completed 1031 exchange to the IRS?

• You or your preparer report the exchange on IRS Form 8824 with your tax return for the year of the exchange and maintain detailed records.

Are Colorado state taxes deferred in a 1031 exchange?

• Colorado tax treatment may differ from federal rules; consult your CPA and review current guidance from the Colorado Department of Revenue.