Who Uses 1031 Exchanges — and Why?

How a Restless Pursuit of Opportunity Drives Investors to Use 1031 Exchanges

At 1031 CORP., we believe in a restless pursuit of opportunities—for our clients, our referral partners, and their long-term financial goals. That same mindset is what drives many investors to pursue a 1031 exchange, one of the most powerful and flexible tax-deferral strategies available in real estate.

Each year, we work with exchangers from all walks of life. While their backgrounds differ, they share a common objective: they want to maximize their investment potential and explore new opportunities without being held back by unnecessary tax burdens.

Below, we break down who typically uses 1031 exchanges and why this powerful strategy aligns with their pursuit of growth.

1. Individual Investors Seeking to Build Wealth

Many exchangers are everyday investors who own rental properties, such as single-family homes, small apartment buildings, or vacation rentals held for investment.

Why They Exchange

These investors are motivated by a desire to:

• Unlock new investment opportunities by using all their equity, not what remains after taxes
• Trade up to higher-performing properties for stronger cash flow
• Consolidate or diversify their portfolio
• Continue building long-term wealth

For these individuals, a 1031 exchange is a strategic tool that supports their ongoing pursuit of better opportunities in the real estate market.

2. Business Owners and Owners of Investment Property

Farmers, landlords, entrepreneurs, and self-employed professionals often hold real estate used in their business or as an investment.

Why They Exchange

They use 1031 exchanges to:

• Reposition their business for future growth
• Relocate or expand into new markets
• Trade into more efficient or modern facilities
• Exit strategy for retiring business owners

1031 exchange allows them to adapt as their business evolves, ensuring they’re always prepared to capitalize on new opportunities rather than being constrained by tax consequences.

3. Commercial Investors and High-Net-Worth Individuals

Experienced investors often incorporate 1031 exchanges as a key piece of a long-term, tax-efficient investment strategy.

Why They Exchange

Their goals often include:

• Maximizing buying power through full tax deferral
• Strategic diversification into new markets, asset classes, or property types
• Capturing appreciation from long-held assets to trade up using pre-tax dollars
• Transitioning into passive investments, such as Triple Net Leases (NNN) or Delaware Statutory Trusts (DSTs)

These investors use 1031 exchanges to help them seize opportunities that support sustained growth, portfolio expansion, and financial flexibility.

4. Families Planning for the Future

Families often exchange with estate and generational planning in mind.

Why They Exchange

Many families use exchanges to:

• Continue compounding wealth over multiple generations
• Prepare properties that are easier for heirs to manage
• Leverage long-term tax efficiency
• Position assets for a potential step-up in basis

For these families, the 1031 exchange facilitates a forward-looking pursuit of opportunity, ensuring their legacy continues to grow.

5. Investors Seeking to Reduce Management Responsibilities

As property owners approach retirement—or simply want a lifestyle change—they often exchange to simplify their investments.

Why They Exchange

These investors may be looking to:

• Eliminate day-to-day landlord duties
• Move into passive income options, such as DSTs or NNN properties
• Reduce stress while maintaining income
• Streamline their portfolio

A 1031 exchange empowers these investors to pursue new opportunities that match their evolving lifestyle, without sacrificing equity to taxes.

Why a 1031 Exchange Is the Opportunity Engine for Real Estate Investors

No matter who the taxpayer is, most exchangers are motivated by the same powerful benefits:

The Core Opportunities Created by a 1031 Exchange

• Immediate tax deferral, preserving liquidity
• Greater reinvestment power, fueling growth
• Flexibility to respond to market shifts
• Improved cash flow through strategic repositioning
• Long-term portfolio optimization
• Significant estate-planning advantages

When investors embrace a mindset of seizing opportunities and partner with a Qualified Intermediary equally committed to that pursuit, the potential becomes unlimited.

Ready to start your exchange? 
Contact our experienced exchange team today and discover why investors across the country trust 1031 CORP. to protect their equity, defer their taxes, and grow their portfolios. Call 800.828.1031 or contact us online.