Defer the Tax, Keep Your Equity Working
A 1031 exchange lets an owner of investment or business-use real estate sell a property and reinvest the proceeds into a like-kind replacement — deferring federal capital gains and depreciation-recapture tax. For Contra Costa industrial owners sitting on years of appreciation, that deferred tax is equity you can redeploy into a larger or better-located asset instead of writing a check to the IRS.
The hard part in a market like the East Bay isn’t selling — it’s finding quality replacement property inside the 45-day window. That’s where deal access matters most.
The 1031 Timeline
45-day identification. From the day your sale closes, you have 45 calendar days to identify replacement property in writing. 180-day close. You must close on the replacement within 180 days of the sale (or your tax-filing deadline, whichever comes first). Qualified intermediary. You can’t take receipt of the sale proceeds — a qualified intermediary must hold them, and you engage them before you close.
These are calendar days, with no extensions short of a federally declared disaster. Miss either deadline and the exchange collapses, so the planning starts before you list, not after.
Finding Replacement Properties for Sale in a Tight Market
A large share of quality East Bay industrial trades off-market. As a Lee & Associates principal active across Contra Costa County and the broader East Bay, I see deals before they list — multi-tenant industrial, NNN-leased assets, and industrial outdoor storage — and can line up replacement candidates while your sale is still in escrow. For larger gains, the exchange can be spread across multiple replacement properties.
Forward, Reverse & Improvement Exchanges
Forward: sell first, then buy within the windows — the most common structure. Reverse: acquire the replacement before selling the relinquished property, useful when the right asset surfaces first. Improvement: use exchange funds to build or upgrade the replacement. Each adds cost and complexity; the right structure depends on your timeline, the asset, and your intermediary and CPA’s guidance.
New to the rules? Start with our 1031 exchange guide for California industrial owners and what changed for 2026.
This page is general information, not tax or legal advice. 1031 rules are strict and fact-specific — work with a qualified intermediary and your CPA or attorney before acting.