From the Wyo Stays team — a licensed Wyoming brokerage. Educational information, not tax or legal advice. 1031 rules are strict and fact-specific — work with a qualified intermediary and your CPA.
A 1031 exchange lets you sell an investment property and roll the gain into another one without paying capital gains tax now — deferring it, potentially indefinitely. For a growing STR owner, it's one of the most powerful wealth tools in the code.
The core idea
Instead of selling, paying tax on your gain (plus depreciation recapture), and reinvesting what's left, you exchange into a "like-kind" property and defer the tax — keeping your full equity working for you.
The rules that trip people up (get these exactly right)
- Like-kind, investment-for-investment — real property held for investment/business for real property held for investment. (Your personal residence doesn't qualify.)
- Use a Qualified Intermediary (QI) — you cannot touch the sale proceeds. The QI holds them. Set this up before closing the sale.
- 45-day identification — you have 45 days from the sale to formally identify replacement property(ies).
- 180-day close — you must close on the replacement within 180 days.
- Equal-or-greater — to fully defer, reinvest all proceeds and match or exceed value and debt.
Why STR owners use it
- Trade up into a bigger or better-performing property without a tax hit.
- Consolidate or relocate your portfolio.
- Defer depreciation recapture (see that article) along with the gain.
The catch to know
STRs with significant personal use can complicate qualification — the property generally needs to be held for investment. This is exactly a "confirm with your CPA and QI before you list" situation.
→ Explore Selling a Performing STR and Refinance vs. Sell, or → get a free evaluation — as a licensed brokerage we can help you sell and coordinate the exchange timeline.
Educational information only — not tax or legal advice.