1031 Exchange Basics for Oregon Real Estate Investors (2026)

A 1031 exchange lets you sell investment or business real estate and defer the tax on your gain by buying other like-kind real estate. You must identify replacement property within 45 days and close within 180 days, and a qualified intermediary must hold the money. Oregon follows the federal rules, with its own withholding and reporting steps.

A 1031 exchange lets you sell investment or business real estate and defer the tax on your gain by buying other like-kind real estate. You must identify replacement property within 45 days and close within 180 days, and a qualified intermediary must hold the money. Oregon follows the federal rules, with its own withholding and reporting steps.

This guide covers the basics. Every exchange has tax details, so work with a CPA or tax attorney and a qualified intermediary before you list.

What qualifies for a 1031 exchange

Section 1031 applies to real property held for productive use in a trade or business or for investment. According to the IRS Form 8824 instructions, exchanges after 2017 apply only to real property, and not to real property held primarily for sale.

In practical terms, that usually includes:

• Rental homes, duplexes, and small apartment buildings.
• Commercial buildings and land held for investment.
• Swaps between types, such as a rental house for raw land, since real property is generally like-kind to other real property held for business or investment.

It does not include your primary residence, a second home used mainly for personal stays, or homes bought to fix and resell quickly. The IRS also excludes inventory, stocks, bonds, notes, and other securities.

The two deadlines that cannot slip

The IRS sets two time limits for a deferred exchange:

• Day 45: You must identify potential replacement properties in writing, signed by you and delivered to a proper party, such as the qualified intermediary.
• Day 180: You must receive the replacement property within 180 days of the sale, or by the due date of your tax return including extensions, whichever comes first.

The two periods run at the same time, not back to back. Sales late in the year deserve extra attention: if your return is due before day 180, you may need to file an extension to use the full window. Ask your tax advisor about that before closing.

How to identify replacement property

Treasury regulations at 26 CFR 1.1031(k)-1-1) give you three ways to identify property:

• 3-property rule: Identify up to three properties of any value.
• 200 percent rule: Identify any number of properties, as long as their total value does not exceed 200 percent of the value of what you sold.
• 95 percent rule: If you identify more than either limit allows, the exchange can still qualify only if you acquire at least 95 percent of the total value you identified.

Most investors use the 3-property rule because it is simple. Naming a backup or two protects you if your first choice falls through during inspections or financing.

The qualified intermediary's role

You cannot touch the sale proceeds. Under the same regulation, receiving the money, or having it made available to you, can break the exchange. That is why investors use a qualified intermediary, a neutral party who signs a written exchange agreement with you, holds the funds, and uses them to buy the replacement property.

The intermediary cannot be you or a disqualified person, which generally includes your agent, attorney, or accountant if they have worked for you recently. Choose the intermediary and sign the exchange agreement before your sale closes, not after.

Ask each intermediary how client funds are held, whether accounts are segregated, what bonding or insurance they carry, and how quickly they can wire money for a replacement closing. Your escrow officer will also need the intermediary's instructions well before the closing date.

Oregon specific rules

Oregon generally follows the federal treatment, with two items to know:

• Nonresident withholding: When a nonresident sells Oregon real property, escrow generally must withhold the least of 4 percent of the price, 8 percent of the gain included in Oregon taxable income, or the net proceeds, under OAR 150-314-0040. The same rule says withholding is not necessary when the property is relinquished to a qualified intermediary in a 1031 exchange, unless part of the proceeds are paid to the seller. Oregon residents are not subject to this withholding.
• Form OR-24: If you exchange Oregon business or investment property for property outside Oregon, the Oregon Department of Revenue requires Form OR-24 for the year of the exchange and every year after until you dispose of the replacement property. It is not used for Oregon to Oregon exchanges.

Federally, you report the exchange on Form 8824 with your return.

Timing an exchange in today's market

The market backdrop affects how easy it is to find replacement property. RMLS reported 4.2 months of inventory across the Portland Metro in September 2026, up from 3.8 months a year earlier, with total market time of 68 days, according to Lovejoy Real Estate. In Washington County, Redfin shows a median sale price of about $576,000 for the three months ending September 2026.

More inventory means more choices inside your 45 day window. Still, the strongest plan is to start shopping before you list, so your identification list is ready when your sale closes. Also plan financing early, because a smaller replacement property or a smaller new loan can create taxable "boot."

Next steps

A 1031 exchange can be a powerful way to grow or reposition a portfolio, but the deadlines are strict and the details matter. Start with your tax advisor and a qualified intermediary, then let us help you price your sale and line up replacement options across Washington County and the Portland Metro.

Call or text Kent at (503) 784-1065, or reach out through our contact page.

Kent Bounds & Kionna SakhoeunRE/MAX Equity Group · Serving Washington County & the Portland Metro area. Call or text (503) 784-1065.