Section 1031 lets real estate investors defer capital gains and depreciation recapture by swapping investment properties, but only when the 45-day identification window, 180-day closing deadline, qualified intermediary rules, and post-TCJA like-kind requirements are followed exactly.
A cost segregation study reclassifies a building's components into shorter MACRS lives, unlocking the 100% bonus depreciation permanently restored by the One Big Beautiful Bill Act of July 2025. On a $1M residential rental, that swings first-year tax savings from roughly $10,700 to roughly $90,600—provided the investor clears IRC §469 passive activity loss limits.
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