I must exchange properties with the same person. Not true! While this was originally required, 1031 exchanges now allow you to sell a property to one individual and purchase the replacement from someone else entirely. I must purchase a property of higher value than the one I’m selling. This only applies if your goal is to defer 100% of the capital gains taxes. You can still enjoy partial tax benefits even when purchasing a property of lesser value, or taking some money at closing and performing a partial 1031 Exchange, instead of a fully tax deferred one. I’m restricted to exchanging for the same type of property I’m selling. Incorrect! Any long-term real estate investment qualifies for a 1031 exchange. For instance, you could sell a vacant lot and acquire a commercial property, or the reverse—your options are incredibly flexible. There’s no point, I’ll have to pay the taxes eventually. Not necessarily. With thoughtful tax planning, it’s possible to defer paying taxes indefinitely.