--- title: Can I Defer Capital Gains Without a 1031 Exchange? description: Are you looking for a way to defer capital gains taxes? A 1031 exchange may be an option – but there may be other options that may be preferable. image: https://blog.fgg1031.com/hubfs/Capital%20Gains%20(1).png --- [info@firstguardiangroup.com](mailto:) [(866)398-1031](tel:(866)398-1031) [![fgg](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2022/fgg.png)](https://brokercheck.finra.org/individual/summary/6470002) [![fgg-871923](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2023/fgg-871923.png)](https://www.bbb.org/us/ca/san-jose/profile/commercial-real-estate/first-guardian-group-1216-887513) [![logo](https://blog.fgg1031.com/hs-fs/hubfs/FirstGuardianGroup_2022/logo.png?width=175&height=56&name=logo.png "logo")](http://fgg1031.com) - [Home](https://fgg1031.com/) - [About Us](https://fgg1031.com/about-us/) - [Current Offerings](https://fgg1031.com/property-listings-directory/) - [Resource Center](https://fgg1031.com/resource-center/) - [Glossary](https://fgg1031.com/glossary/) - [Accommodators](https://fgg1031.com/accommodators/) - [FAQ](https://fgg1031.com/faqs/) - [Tax eBook](https://pages.fgg1031.com/resources/real-estate-tax-deferral-strategies-ebook) - [Real Estate eBook](https://pages.fgg1031.com/real-estate-investing-in-the-new-era2) - [QI eBook](https://pages.fgg1031.com/resources/qualifiedintermediary/ebook) - [Tax Calculator](https://fgg1031.com/tax-calculator/) - [Newsroom](https://fgg1031.com/newsroom/) - [Blog](https://blog.fgg1031.com/blog) - [Events](https://fgg1031.com/events/) - [Contact Us](https://fgg1031.com/contact/) ![search-interface-symbol](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2022/search-interface-symbol.png) ![loader](https://f.hubspotusercontent-eu1.net/hubfs/24949188/Business%20and%20Finance/global/22.gif) ![close](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2022/close.png) From Pages From Blog Pages Load More Load More **Sorry, we couldn't find a match for  "".** Check your spelling or try a related search term. 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By [Paul Getty](https://blog.fgg1031.com/blog/author/paul-getty) Are you looking for a way to defer capital gains taxes? A 1031 exchange may be an option – but there may be other options that may be preferable. In this blog post, we will summarize the common ways that real estate investors can defer capital gains taxes after the sale of an appreciated investment property. #### **Overview of the 1031 Exchange** First introduced in 1921, the 1031 exchange is a tax deferral technique used in the United States to postpone the payment of capital gains taxes on the sale of real estate. It allows an investor to reinvest the proceeds from the sale of one property into another, similar property, and defer paying capital gains taxes on the entire amount until the new property is sold.  The basic principle of a 1031 exchange is that an investor exchanges one investment property for another investment property of equal or greater value while deferring taxes on any taxable gain into the new property. This allows investors to increase their wealth without paying capital gains taxes.  Investors can take advantage of a 1031 exchange tax deferral each time they sell an investment property.  When an investor passes, heirs or a surviving spouse can inherit the investment property at a current market value (also known as “step-up in basis”) and accumulated capital gains and depreciation related tax liabilities are reset to zero. Successor owners will be responsible for only future tax liabilities should they continue to own the property.  The 1031 Exchange is the most common type of tax deferral strategy used by individual real estate investors.  #### **Qualified Opportunity Zone (QOZ) Investments** As part of the Tax Cuts and Jobs Act of 2017, a new form of tax deferral was created called the Qualified Opportunity Zone. Gains from the sale of any appreciated assets including not only real estate, but equities, artwork, collectibles, etc. can be invested in Qualified Opportunity Zone Fund. The QOZ Fund must invest in designated projects in areas throughout the US that have been deemed to in need of investment to spur economic development. QOZ Funds typically invest in ground-up development projects within the designated areas.  QOZ investments provide potential tax benefits in three areas. 1. **Tax deferral through 2026** – If within a 180-day period beginning on the date of the sale of the asset, and the investor invests in QOZ Fund, the taxable gain is deferred until December 21, 2026. 2. **Reduction in taxes owed** – Tax obligations from the sale of the asset are reduced by 10%. 3. **No tax on appreciation of developed assets** – provided that the investor holds the QOZ Fund investment for a minimum of 10 years, there will potentially be no tax obligations on the appreciated value of the developed assets.  While options to defer taxes via the QOZ tax deferral program are currently scheduled to expire in 2026, members of Congress have initiated efforts to extend the program.1 #### **Installment Sales** An installment sale is a type of sale where a buyer takes possession of the property and agrees to pay the seller over time, often making interest only payments for some period followed by a balloon payment to the seller which includes any remaining owed principal. IRS tax code M453 states that ***no capital gains taxes are owed by the seller in an installment sale until such time that they begin collecting principal funds from their sold property*.** While sellers would be obligated to pay income tax on any interest income that they receive in an installment sale, they could defer the payment of capital gains taxes into the future until they receive the principal funds from their sale. The popularity of installment sale transactions increases as interest rates rise. Sellers may be attracted to the notion of receiving monthly interest income at higher rates than may be realized via other investments while deferring payment of capital gains taxes until principal is repaid.  #### **Deferred Sales Trust** or/ **Monetized Installment Sale**  In a **Deferred Sales Trust** or **Monetized Installment Sale**, an intermediary is involved who accepts purchase proceeds from a buyer and then provides funds to seller in either the form of a loan or through a stream of payments from investments that are made by the intermediary. These quasi-installment sales are structured to yield a more immediate use of sale proceeds to the seller than what some tax authorities and agencies believe is intended by current tax laws.2 3 #### **Summary** While the 1031 exchange remains the “gold standard” of real estate tax deferral strategies, there are other options for investors seeking to defer taxes on the gains of their appreciated assets. For more information on real estate tax deferral strategies and to obtain referrals to experienced real estate tax advisors, please contact us at 866 398-1031 or visit our website at [www.FGG1031.com](http://www.FGG1031.com).  [![](https://no-cache.hubspot.com/cta/default/5468919/interactive-183026367788.png)](https://blog.fgg1031.com/hs/cta/wi/redirect?encryptedPayload=AVxigLLn34PR4YiQAGm9Ue%2Fh9t9g9CsC8Pf2tew6OGUmAnc8Xu6KuLoGYiez%2FiOQY3Vy3vSD6CSOZqKG1TrVYZFymECYDgnMry%2FdOM0vLQ%2BRsDPMtsGWbYrkEjl8fsO4bMM6Nuz96Kpo9UgExePqWCtgArROw805CJj7BS7oOVogujuCaGrGnye%2FVddUaSJzN%2F4Ph6cLMlTFscvGP%2BTSYr2wZiqPub%2BzVNh6oNzlJXSdeYNF&webInteractiveContentId=183026367788&portalId=5468919)   1 [https://www.hklaw.com/en/insights/publications/2022/04/congress-looks-to-update-opportunity-zone-program](https://www.hklaw.com/en/insights/publications/2022/04/congress-looks-to-update-opportunity-zone-program) 2 [https://blog.fgg1031.com/blog/california-tax-board-disallows-deferred-sales-trusts](https://blog.fgg1031.com/blog/california-tax-board-disallows-deferred-sales-trusts) 3 [https://www.forbes.com/sites/peterjreilly/2021/05/22/monetized-installment-saleirs-finally-says-it-does-not-work/?sh=195993095275](https://www.forbes.com/sites/peterjreilly/2021/05/22/monetized-installment-saleirs-finally-says-it-does-not-work/?sh=195993095275) ### [Paul Getty](https://blog.fgg1031.com/blog/author/paul-getty) Paul M. Getty is one of the most experienced 1031 exchange specialists in the United States, with a career in real estate that spans over 35 years and more than $5 billion in commercial transactions across every major asset class. His work covers single-family rentals, apartments, retail, office, multifamily, and student and senior housing, giving him a practical understanding of how different property types perform across market cycles and how investors can move between them using tax-deferred exchange strategies. As President and CEO of FGG1031 | First Guardian Group, Paul advises investors through the full 1031 exchange process, from identifying qualifying replacement properties to structuring acquisitions through Delaware Statutory Trusts (DSTs) and wholly owned real estate. His guidance covers both the compliance requirements of a valid exchange and the investment decisions that determine long-term portfolio outcomes – a combination that is difficult to find in a single advisor. Paul holds a California and Texas real estate broker license and carries Series 22, 62, 63, and 82 securities licenses as a registered representative with Emerson Equity LLC, member FINRA /SIPC. He has represented buyers and sellers across complex commercial transactions, sourced and structured debt and equity, and worked alongside nationally recognized firms including Marcus Millichap, CBRE, JP Morgan, and Morgan Stanley. Before founding FGG1031, he co-founded Venture Navigation, a boutique investment banking firm whose M&A and IPO activity generated over $700 million in investor returns. Paul holds an MBA in Finance from the University of Michigan and a bachelor’s degree in chemistry from Wayne State University. He has also completed coursework in artificial intelligence at Stanford University. He is the author of four books on real estate investing and tax deferral strategy, including Tax Deferral Strategies Utilizing the Delaware Statutory Trust (DST) and Real Estate Investing in the New Era, both available on Amazon. A frequent speaker on 1031 exchanges, DST investing, and real estate tax strategy, Paul Getty is a recognized voice for investors and advisors seeking guidance on capital preservation through tax-deferred real estate investment. ## Your Comments : This is a search field with an auto-suggest feature attached. - There are no suggestions because the search field is empty. - Latest Posts - Popular Posts [Partial 1031 Exchange: How It Works, What Gets Taxed, and When It May Make Sense](https://blog.fgg1031.com/blog/partial-1031-exchange-how-it-works) [ 1031 Exchange](https://blog.fgg1031.com/blog/topic/1031-exchange) [721 UPREIT Options in DST Programs (Part 3)](https://blog.fgg1031.com/blog/721-upreit-options-in-dst-programs) [ Real Estate Investors](https://blog.fgg1031.com/blog/topic/real-estate-investors) [ DST](https://blog.fgg1031.com/blog/topic/dst) [ 721 Exchange](https://blog.fgg1031.com/blog/topic/721-exchange) [ UPREIT](https://blog.fgg1031.com/blog/topic/upreit) [ New featured](https://blog.fgg1031.com/blog/topic/new-featured) [Can a 9% Taxable Return Beat a 4.5% Tax Advantaged DST?](https://blog.fgg1031.com/blog/can-a-9-taxable-return-beat-a-4.5-tax-advantaged-dst) [ Real Estate Investors](https://blog.fgg1031.com/blog/topic/real-estate-investors) [ DST](https://blog.fgg1031.com/blog/topic/dst) [ New featured](https://blog.fgg1031.com/blog/topic/new-featured) ### Categories - 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October 20, 2022](https://blog.fgg1031.com/blog/what-is-a-springing-llc) ## Useful Links - Home - About Us - Blogs - Testimonials from Past Customers - Resource Center - Current Offerings Disclaimer: There is no guarantee that any strategy will be successful or achieve investment objectives. All real estate investments have the potential to lose value during the life of the investments. This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please be aware that this material cannot and does not replace the Memorandum and is qualified in its entirety by the Memorandum. This material is not intended as tax or legal advice so please do speak with your attorney and CPA prior to considering an investment. This material contains information that has been obtained from sources believed to be reliable. However, FGG1031, First Guardian Group, LightPath Capital, Inc., and their representatives do not guarantee the accuracy and validity of the information herein. Investors should perform their own investigations before considering any investment. There are material risks associated with investing in real estate, Delaware Statutory Trust (DST) and 1031 Exchange properties. These include, but are not limited to, tenant vacancies, declining market values, potential loss of entire investment principal. Past performance is not a guarantee of future results: potential cash flow, potential returns, and potential appreciation are not guaranteed in any way and adverse tax consequences can take effect.  The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities. All financed real estate investments have a potential for foreclosure. Delaware Statutory Trust (DST) investments are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments. Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions. Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits. IRC Section 1031, IRC Section 1033, and IRC Section 721 are complex tax codes; therefore, you should consult your tax and legal professional for details regarding your situation. DST 1031 properties are only available to accredited investors (generally described as having a net worth of over one million dollars exclusive of primary residence) and accredited entities only (generally described as an entity owned entirely by accredited individuals and/or an entity with gross assets of greater than five million dollars). If you are unsure if you are an accredited investor and/or an accredited entity, please verify with your CPA and Attorney prior to considering an investment. Securities offered through registered representatives of [LightPath Capital, Inc.](http://www.lightpathcapital.com/) Member [FINRA](http://www.finra.org/) / [SIPC](https://www.sipc.org/). FGG1031, First Guardian Group, and LightPath Capital, Inc. are separate entities. Copyright 2022, All Rights Reserved, FGG1031 [![FGG_Footer_White](https://blog.fgg1031.com/hs-fs/hubfs/FirstGuardianGroup_2022/FGG_Footer_White.png?width=300&height=95&name=FGG_Footer_White.png "FGG_Footer_White")](http://fgg1031.com) 97 East Brokaw Road, Suite 350, San Jose, CA 95112 [(866) 398 1031](tel:(866)%20398%201031) [info@firstguardiangroup.com](mailto:) [![Bitmap](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2023/Bitmap.png)](https://brokercheck.finra.org/individual/summary/6470002) ## Recent Blogs - [Understanding the Difference Between Inheritance and Estate Tax August 3, 2023](https://blog.fgg1031.com/blog/understanding-the-difference-between-inheritance-and-estate-tax) - [Public or Private Real Estate? Your Investment Portfolio May Need Both July 27, 2023](https://blog.fgg1031.com/blog/public-or-private-real-estate-your-investment-portfolio-may-need-both) - [How to Use 1031 Exchange Funds to Improve Your Replacement Property July 20, 2023](https://blog.fgg1031.com/blog/how-to-use-1031-exchange-finds-to-improve-your-replacement-property) ## Useful Links - [Home](http://fgg1031.com/) - [About Us](https://fgg1031.com/about-us/) - [Blogs](https://blog.fgg1031.com/blog) - Testimonials from Past Customers - [Resource Center](https://fgg1031.com/resource-center/) - [Current Offerings](https://fgg1031.com/property-listings-directory/) FGG1031 | First Guardian Group and Emerson Equity LLC do not provide legal or tax advice. Securities offered through [Emerson Equity LLC](http://www.emersonequity.com/) Member [FINRA/SIPC](http://finra.org/) and MSRB registered. Emerson Equity LLC is unaffiliated with any entity herein. 1031 Risk Disclosure: - There is no guarantee that any strategy will be successful or achieve investment objectives; - Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments; - Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities; - Potential for foreclosure – All financed real estate investments have potential for foreclosure; ·Illiquidity – Because 1031 exchanges are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments; - Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions; - Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits No offer to buy or sell securities is being made. Such offers may only be made to qualified accredited investors via private placement memorandum. Risks detailed in a private placement memorandum should be carefully reviewed, understood and considered before making such an investment. Prospective strategies and products used in any tax advantaged investment planning should be reviewed independently with your tax and legal advisors. Changes to the tax code and other regulatory revisions could have a negative impact upon strategies developed and recommendations made. Past performance and/or forward looking statements are never an assurance of future results. Many of the investments offered will be only available to those investors meeting the definition of an Accredited Investor under SEC Rule 501(A) and offered as Regulation D private placement securities via a Private Placement Memorandum (“PPM”). Prospective investors must receive, read and understand all of the risks associated with buying private placement securities. Investments are not guaranteed or [FDIC](http://fdic.org/) insured and risks may include but are not limited to illiquidity, no guarantee of income or guarantee that all tax advantages or objectives will be met and complete loss of principal investment could occur. **Risk Disclosure:** Alternative investment products, including real estate investments, notes & debentures, hedge funds and private equity, involve a high degree of risk, often engage in leveraging and other speculative investment practices that may increase the risk of investment loss, can be highly illiquid, are not required to provide periodic pricing or valuation information to investors, may involve complex tax structures and delays in distributing important tax information, are not subject to the same regulatory requirements as mutual funds, often charge high fees which may offset any trading profits, and in many cases the underlying investments are not transparent and are known only to the investment manager. Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop. There may be restrictions on transferring interests in any alternative investment. Alternative investment products often execute a substantial portion of their trades on non-U.S. exchanges. Investing in foreign markets may entail risks that differ from those associated with investments in U.S. markets. Additionally, alternative investments often entail commodity trading, which involves substantial risk of loss. NO OFFER OR SOLICITATION: The contents of this website: (i) do not constitute an offer of securities or a solicitation of an offer to buy of securities, and (ii) may not be relied upon in making an investment decision related to any investment offering by FGG1031 | First Guardian Group, Emerson Equity LLC, or any affiliate, or partner thereof. FGG1031 | First Guardian Group does not warrant the accuracy or completeness of the information contained herein. Copyright 2026, All Rights Reserved, FGG1031