What types of properties qualify for a 1031 exchange*?

To qualify for a 1031 exchange, the properties involved must be considered "like-kind." This generally means that real estate must be exchanged for real estate, and personal property must be exchanged for personal property of the same nature or character. There is some flexibility within these categories. For example, an apartment building can be exchanged for a strip mall, or a piece of raw land can be exchanged for a rental property.

Can I do a partial 1031 exchange*?

Yes, it is possible to do a partial 1031 exchange, where only a portion of the proceeds from the sale of the relinquished property is transferred in the replacement property. In this case, the seller would have to pay capital gains taxes on the portion of the proceeds that were not used for the new property purchase. The portion utilized through the 1031 exchange would still benefit from tax deferral.

What is not allowed in a 1031 Exchange*?

According to IRS rules, certain transactions and property types are not allowed in a 1031 exchange. These include personal use properties like primary residences, stocks and bonds, dealer properties intended for sale, foreign real estate, personal property like furniture, and property acquired with immediate resale intent. Consulting a tax professional is recommended to understand eligibility and compliance requirements.

How would the title be held under a fractioned ownership?

In most cases the tittle would be held as Tenant in Common (TIC). TIC is a legal ownership structure where multiple investors may own an undivided interest in a real property asset. Owners can hold unequal shares and they can sell their shares independently from other tenants.

1031 Exchange for Vacation Homes

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Our 1031 Model

Transcending Traditional 1031 Exchanges

Fraxioned emerges as a game-changer for 1031 Exchanges, offering a unique and innovative Fractionalized solution — empowering buyers and sellers to unlock unparalleled real estate opportunities.

Unlike the traditional 1031 exchange, where you sell a property and acquire another, Fraxioned offers a new dimension. The Fraxioned 1031 Exchange model lets your clients transfer their proceeds into luxury vacation homes at affordable costs - offering a wonderful lifestyle experience.

Our innovative Fraxioned Ownership Model enables your clients to co-own premium properties, enjoy luxurious vacations, and generate rental revenue when unused.

Through our co-ownership model, we make high-end real estate more accessible, requiring less capital compared to traditional home purchases.
We help your clients diversify their holdings, maximize returns, and experience the benefits of owning premium vacation homes.

Fractional Ownership - An Innovative Real Estate Model

With Fraxioned, your clients are introduced to a unique and innovative ownership model: Fractional Ownership. By leveraging our 1031 exchange solutions, your clients can unlock fractional ownership of premium vacation properties in some of the most sought-after destinations.

Rather than being limited to a single property, clients can diversify their purchases across different locations, mitigating risk and catering to their unique travel preferences.
Our properties offer significant potential for appreciation and rental revenue, making them perfect for clients seeking to reinvest their proceeds while maintaining compliance with 1031 regulations.

1031 Exchange with Fraxioned Pitch 59

Partner with Fraxioned and Revolutionize your Real Estate Portfolio

We understand the importance of providing clients with exceptional real estate opportunities. Hence, we're thrilled to extend our partnership to Qualified Intermediaries like you to introduce our offerings to your client base and offer a hassle-free 1031 exchange.

By partnering with Fraxioned, you'll receive a 2% commission on every successful sale and additional incentives tailored for our valued partners*.

Together, we can unlock lucrative opportunities for your clients, allowing them to co-own luxurious properties, generate rental revenue, and diversify their real estate holdings like never before.
Our current collaboration with my1031 Pros as a QI has been a resounding success, and we're eager to expand our network across the US.

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Fraxioned Advantages

Real Estate Holdings Diversification

Elevated Lifestyle

Rental Revenue

Tax-Deferred Growth

Professional Management

Seamless 1031 Exchange

1031 Exchange Basic Concepts

Fraxioned will work with you and your accounting/legal team to satisfy the requirements under IRS section 1031. We strongly recommend the use of a professional team to ensure that the exchange is not disqualified.

In general terms, you can avoid recognizing a gain on a property if there is an exchange for another like-kind property and if you meet the other conditions from the IRS.

Proceeds from the sale

Taking control of the proceeds from your asset sale before the exchange is complete will likely disqualify the entire transaction and make the gain immediately taxable. The best way to avoid the receipt of proceeds is to use a qualified intermediary to hold those proceeds until the exchange is complete.

Capital Gains

Taxes on capital gains are as follows:

Short-term capital gains are taxed at the same tax as ordinary income, currently from 10% to 37%.
Long-Term capital gains are taxed between 0% to 20% depending on filing status and the amount of the gain.

Short term capital gains 1031 exchange Fraxioned

Time Limits

To have a successful exchange, you must consider these 2-time limits:

45-day limit: you have 45 days from the date you sell the relinquished property to identify potential replacement properties.
180-day limit: the replacement property must be received, and the exchange completed no later than 180 days after the sale of the exchanged property (with some exceptions).

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Multiple Replacement Properties

IRS rules allow you to name more than one replacement property. There are 3 rules to consider:

You may name up to (3) three replacement properties, so long as you close on one of them within the 180-day period.
You can name any number of properties if their fair market value at the end of the identification period does not exceed 200% of the fair market value of the old property as of the transfer date.
You can identify as many properties as you like if you purchase 95% of what you identify. After the 45th calendar day, the identifications cannot be changed.

*For more information about how Fraxioned can assist you in your 1031 exchange, contact us at: sales@fraxioned.com

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Frequently Asked Questions on 1031

1031 Exchange

*Fraxioned Corp and its affiliates do not provide tax, legal, or accounting advice. These FAQs are for informational purposes only, and are not intended to provide and should not be relied on for, tax, legal, or accounting advice. Fraxioned makes no representations or guarantees regarding the economic benefits to be derived from the purchase or resale of the Interest or rental of the Property.

1031 Exchange

*Fraxioned Corp and its affiliates do not provide tax, legal, or accounting advice. These FAQs are for informational purposes only, and are not intended to provide and should not be relied on for, tax, legal, or accounting advice. Fraxioned makes no representations or guarantees regarding the economic benefits to be derived from the purchase or resale of the Interest or rental of the Property.

1031 Exchange

*Fraxioned Corp and its affiliates do not provide tax, legal, or accounting advice. These FAQs are for informational purposes only, and are not intended to provide and should not be relied on for, tax, legal, or accounting advice. Fraxioned makes no representations or guarantees regarding the economic benefits to be derived from the purchase or resale of the Interest or rental of the Property.

1031 Exchange

*Fraxioned Corp and its affiliates do not provide tax, legal, or accounting advice. These FAQs are for informational purposes only, and are not intended to provide and should not be relied on for, tax, legal, or accounting advice. Fraxioned makes no representations or guarantees regarding the economic benefits to be derived from the purchase or resale of the Interest or rental of the Property.