Should I sell and pay the tax, or complete a 1031 exchange?

The decision in plain language

The goal is to compare realistic choices before documents are signed, funds move, or a filing position is fixed. A useful analysis ties the tax rules to your actual facts, timing, cash needs, alternatives, and records.

This page is an educational starting point. It is not a conclusion about your facts.

What changes the answer

• Adjusted basis, accumulated depreciation, estimated selling costs, and expected proceeds.
• Federal and state gain, recapture, and any state-specific withholding or conformity issues.
• Debt replacement, cash needs, and whether any non-like-kind property may be received.
• The identification and closing timeline and the role of a qualified intermediary.
• Quality, pricing, and financing of realistic replacement properties.
• Estate, partnership, and longer-term disposition objectives.

Paths a Decision Memo may compare

• Complete a properly structured exchange because the replacement property and deferral fit the investment plan.
• Sell and recognize the tax because liquidity, timing, or replacement economics matter more than deferral.
• Exchange only part of the value and recognize some gain, subject to the transaction facts.
• Delay the sale while the ownership, replacement, or documentation plan is resolved.

The relevant paths depend on what remains legally and practically available before your deadline.

Records to gather

• Current depreciation schedule and adjusted basis detail
• Proposed sale agreement and estimated closing statement
• Debt payoff and cash need schedule
• Qualified intermediary correspondence
• Potential replacement-property information
• Ownership and partnership agreements
• Federal and state tax projections

Phænix confirms a tailored records list before paid work begins. Sensitive documents should be shared only through the secure portal provided for an engagement.

Timing matters

Bring the question forward before the transaction or filing position becomes permanent. The standard Decision Memo is generally delivered within 5 to 10 business days after the agreed records are complete and accepted. A deadline can change the scope or make analysis impractical, so identify it in the Readiness Intake.

What you leave with

A Decision Memo defines the question, states the material facts and assumptions, compares viable alternatives, models the relevant federal and state consequences, and gives you a written CPA recommendation with next steps. It is designed to help you act, coordinate with other professionals, and preserve the reasoning behind the decision.

Related decision guides