Real estate tax strategy, for owners, investors, and their advisors.
Where the money goes after the closing
You are selling appreciated property. The sale price is one number. What you actually keep, and whether your equity keeps working or goes to tax, is decided before you close, on a clock most sellers underestimate.
Land & Tax Strategies is the tax-strategy layer for that moment: a real estate tax advisor for owners and investors, working alongside the agent, attorney, qualified intermediary, and CPA you already have. We review your sale and lay out every option to legally defer, reduce, or eliminate the tax, and we make sure you have a fallback so the clock never forces you into a taxable sale or the wrong property.
Already closed, or mid-exchange with the clock running? There may still be time. Start with the same call.
What you keep is another.
Selling appreciated real estate triggers a real tax bill, in layers. Most sellers count one of them. The Section 1031 exchange that can defer them all runs on a hard clock that people routinely underestimate.
Capital gains
The federal tax on the difference between what you sell for and your adjusted basis. Years of appreciation, taxed in a single year.
Depreciation recapture
The depreciation you deducted on a rental comes back at sale as unrecaptured Section 1250 gain, taxed at its own higher rate. The layer most sellers forget. Still deciding whether to sell the rental at all? Start with that question.
Net investment income tax
An additional federal tax that applies to investment gains above an income threshold, and a large sale often pushes a seller over it for that year.
State tax
Florida has none, and the rest of the country mostly does. Where the property sits, and where you live, both matter.
A 1031 exchange runs on a clock most sellers underestimate.
From the day you close, you have 45 days to identify replacement property and 180 days to close on it. Neither deadline moves. The 1031 exchange timeline looks generous on paper and collapses in practice, because the properties you identified fall through, and often they do.
Everyone on the deal owns a piece of it. Your agent runs the sale. The qualified intermediary holds the money and the mechanics. Your CPA reports it next spring. No one owns the question that actually decides the outcome: does the exchange protect your equity, and what happens if the properties you identified fall through?
There is a second, honest part. Your agent is under structural pressure from the second commission to steer you toward whatever closes the next deal, not necessarily the right investment. That is a pressure agents are under, not a fault of the agent, and naming it is the reason good agents send us their clients.
What happens when a 1031 exchange fails, and the fallback that keeps it whole.
A failed 1031 exchange is a fully taxable sale. Miss the identification window or run out the clock, and the entire gain, recapture included, lands in a single year with no do-over. Or beat the clock by buying the wrong property, and trap years of equity in an asset you never wanted.
So push your first two identified properties as hard as you can. That is the real work, and it is your agent’s job. But line up a pre-vetted fallback as well: an already-vetted, passive replacement that sizes to your sale, so that when your first choices fall through you still complete the exchange instead of paying tax on the entire sale.
On this page the fallback stays a concept. The specifics, including who can participate and how, are for the conversation, because they depend on your sale and your situation.
It is already vetted
So it moves fast when the clock is short. The due diligence is done before you need it, not after your first choice falls apart at day 40.
It is passive
No tenants, no toilets, no trash. If you are selling because you are done managing property, the fallback does not put you back in that business.
It sizes to your sale
Rather than forcing you to find a single property at or above your sale price, and to replace the debt on top of it, before the deadline.
Is a 1031 exchange worth it? Sometimes the answer is no.
The clock is brutal and the pressure is real. Sometimes a 1031 is not the right move for you, and we will say so. The written plan measures the exchange against every other legal path, so the choice is made on the numbers, not the deadline.
A full 1031 exchange
Defer the whole gain into like-kind property, with a fallback so the clock cannot force a taxable sale.
A partial exchange
Exchange some of the proceeds, take the rest as cash, and pay tax only on what you took.
An installment sale
Spread the gain across the years you are paid, instead of recognizing it all at once.
The home exclusion
If the property was your home for two of the last five years, part of the gain may be excluded outright, even on a home you later rented.
Basis and timing
A complete record of what you paid and improved, the right tax year, and offsetting losses all change the number before any strategy does.
Paying the tax, on purpose
When the gain is small, or you want out of real estate, paying with a plan beats an exchange you did not want.
Three steps, before the clock starts.
A free call
We confirm your situation and tell you whether we can help. Sometimes the answer is that you do not need us.
We build your Clear Path
We review your sale and lay out every option to legally defer, reduce, or eliminate the tax, the 1031 and the strategies around it, in a written plan for your specific situation. It ends with your options laid out, and the choice of what to do next is yours.
We walk you through it
On a call, start to finish. You leave understanding your options, your deadlines, and what each path means for what you keep.
What the work covers: capital gains, depreciation recapture, net investment income tax and state exposure (Florida and Texas each have their own page); the 1031 timeline and identification rules; the fallback; the other paths measured against the exchange; and coordination with your agent, attorney, qualified intermediary, and CPA so nothing falls between the closing and the return.
The Real Estate Clear Path is a flat fee, quoted on your free call before you commit to anything.
What a real estate tax advisor adds to the team you already have.
Tax planning for real estate investors and owners is one job, and it is ours. We work alongside your agent, your attorney, your qualified intermediary, and your CPA, not around them. Steve Medendorp, Esq., JD, MBA, co-founder, leads the real estate work, with twenty years in title, real estate, and eminent domain matters.
The limit, stated plainly: we are the tax-strategy layer. We do not list your property, we do not hold your exchange funds, and we do not give legal advice.
Keep your equity working. Do not lose it to tax, and do not let a deadline push you into the wrong replacement.
The fallback protects your client and your commission at the same time. A blown exchange is a lost client and a taxable surprise for the person who trusted you; the fallback keeps the deal whole.
The tax exposure and the exchange mechanics are set in the documents and the timeline. We coordinate so nothing falls between the closing and the return.
The equity is lost to tax, or stuck in the wrong place.
Sell, miss the identification window or run out the clock, and the entire gain is taxable in a single year, with no do-over. Or beat the clock by buying the wrong property, and trap years of equity in an asset you never wanted. Either way the deadline, not you, made the decision.
Your equity kept working.
It moved into the next investment on your terms, with the tax deferred, reduced, or eliminated, and because you had a fallback, the clock never cornered you into a taxable sale or a property you did not want. Where the money goes after the closing, you decided, not the deadline.
Before you close.
The questions sellers ask us most, answered plainly. Every situation is different; confirm specifics with your attorney and CPA.
If you do not identify replacement property within 45 days of closing, or do not acquire it within 180 days (or by your tax return due date, if that comes first), the exchange fails and the gain on the entire sale is taxable, capital gains and depreciation recapture included, with no do-over. If the exchange started late in one year and failed in the next, the timing of when the gain is reported may be a question worth asking before the deadline passes. The way to avoid the failure is a pre-vetted fallback lined up before the 45-day window closes, so that when your first choices fall through you still complete the exchange.
Often, but not always. A 1031 exchange defers the tax on appreciated investment property when you reinvest in like-kind property on a strict timeline. It is usually worth it when the gain is large relative to the sale price, you intend to keep owning real estate, and you can meet the clock without buying something you do not want. It is often not worth it when the gain is small, when you want out of real estate, or when the deadline would push you into the wrong property. Sometimes the right answer is to pay the tax with planning. We will tell you which on the first call.
A partial exchange, where some proceeds are exchanged and the rest taken as taxable cash. An installment sale, which spreads the gain across the years payments are received. The Section 121 exclusion if the property was your home for two of the last five years, including homes that were later rented. Refinancing and holding rather than selling. Documenting basis properly so the gain is measured correctly, and timing the sale across tax years. And paying the tax deliberately when the numbers say so. Which of these apply to your sale is what the written plan lays out.
The main tool is the Section 1031 exchange: sell investment or business real estate, reinvest in like-kind real estate through a qualified intermediary, identify within 45 days and close within 180, and the gain is deferred into the new property. An installment sale defers part of the gain by spreading it over the years you are paid. Each has rules on debt, cash received, and property type, and the deadlines are not extendable except in declared disasters, so the planning has to happen before you close.
There is no switch that makes the tax on a plain sale disappear. There are lawful ways to defer it (a 1031 exchange), spread it (an installment sale), exclude part of it (Section 121, if the property was your home), and reduce it (a complete basis record of what you paid and improved, the right timing, and offsetting losses). Used together and planned before the contract is signed, they change what you keep. That is planning, and it is what we do.
Every year you owned a rental you deducted depreciation, which lowered your basis. When you sell, the gain attributable to that depreciation, called unrecaptured Section 1250 gain, is taxed at a federal rate of up to 25 percent rather than the lower long-term capital gains rate, and the net investment income tax may apply on top. It is the layer most sellers forget when they estimate their tax. A 1031 exchange defers recapture along with the rest of the gain. If the question is whether to sell the rental in the first place, Should I sell my rental property? works through it, costs included.
No. Florida has no state income tax, so there is no Florida capital gains tax on the sale of real estate. Federal capital gains tax, depreciation recapture and the net investment income tax still apply in full. Florida’s documentary stamp tax on the deed is a transfer tax paid at closing, not a tax on your gain. If you live in Florida but are selling property in another state, that state may tax the gain.
Not necessarily. If you are inside the 45-day or 180-day windows, there is still time to protect the exchange, including lining up a fallback. If you have closed and taken the proceeds, a 1031 is off the table for that sale, but the tax year is not over and there may still be planning that changes the outcome. Start with the same free call; we will tell you plainly what is and is not available.
This page is general information about the tax treatment of real estate sales and Section 1031 exchanges. It is not tax, legal, or investment advice, and it does not describe or offer any investment. Your outcome depends on facts specific to your property and your return; confirm them with your own advisors.