Thinking about selling a rental near La Paz at Desert Springs and rolling your gains into another property? You have a short window, strict rules, and a local market that moves differently than it did a few years ago. With the right plan, a 1031 exchange can help you keep your money working while you reposition into a smarter asset. Here is how to do it in 85254 with confidence. Let’s dive in.
What a 1031 exchange is
A 1031 exchange lets you defer capital gains tax when you sell investment or business-use real estate and purchase other like-kind U.S. real property. It is a deferral strategy, not a tax elimination. Personal-use property, like a primary residence, generally does not qualify. For a plain-English overview, see this summary of Section 1031 of the Internal Revenue Code.
Deadlines you cannot miss
The IRS gives you two hard timelines. You have 45 days from the sale of your relinquished property to identify your replacement property in writing. You must close within 180 days of the sale, or by your tax filing deadline with extensions if earlier. These deadlines are strict and missing them can invalidate your exchange. You can confirm both windows in the IRS Form 8824 instructions.
The role of a Qualified Intermediary
To avoid constructive receipt of funds, your sale proceeds must be held by a Qualified Intermediary (QI). A QI is a neutral third party that prepares exchange documents, holds proceeds in a dedicated account, and coordinates closings. The IRS outlines the QI framework and disqualified parties in its guidance on qualified intermediaries. Choose a reputable, insured QI before you close the sale.
Local mechanics in Maricopa County
You will close through a local title and escrow company that understands Arizona and Maricopa County requirements, including the Affidavit of Property Value and recording standards. After you buy a replacement property, the County Assessor updates values using the Limited Property Value and Full Cash Value systems, which can affect future tax bills. For how assessments are set, review the Maricopa County Assessor’s overview of LPV and assessments.
Arizona generally conforms to federal 1031 treatment, which means a federal deferral is typically recognized at the state level. Conformity dates can change, so verify timing for your tax year with your advisor. See a recent Deloitte update on Arizona IRC conformity for context to discuss with your CPA.
Market snapshot near La Paz at Desert Springs
La Paz at Desert Springs sits in the 85254 corridor, a Scottsdale-postal, Paradise Valley Village area known for established single-family homes and convenient North Phoenix access. Through 2024 and into mid-2025, the Phoenix–Scottsdale market softened compared with prior years. Inventory rose and more listings stayed on the market longer; Axios reported in June 2025 that a large share of Phoenix listings were 60-plus days old. For you, that can mean more choices for replacement property and a bit more negotiation room within your 45-day window.
Strategies investors use
- Fully defer: Reinvest all net proceeds and replace equal or greater debt to avoid taxable “boot.”
- Partial defer: Take some cash out and pay tax only on that portion, while deferring the rest.
- Passive options: Consider Delaware Statutory Trusts (DSTs) if you want diversification or faster execution; here is an overview of DSTs in 1031 exchanges.
- Reverse exchange: If the ideal replacement appears first, a specialist can “park” the property while you sell; see this safe harbor overview for reverse exchanges and engage experienced counsel.
Step-by-step timeline
- Decide if 1031 fits your goals. Talk with your CPA about capital gains, depreciation recapture, and potential net investment income tax using the IRS Form 8824 instructions as a framework.
- Hire your QI before closing the sale. Have the QI provide escrow instructions and identification forms, and coordinate with title and escrow per IRS QI guidance.
- Close the sale and fund the exchange account. Identify replacements within 45 days under the three-property, 200 percent, or 95 percent rules.
- Close on the replacement within 180 days. Keep thorough records and file Form 8824 with your tax return.
Common pitfalls to avoid
- Touching the proceeds. Do not accept sale funds directly. Ensure your QI agreement is in place before closing.
- Missing the 45/180-day windows. Build a shortlist of replacement options before you list or as soon as you open escrow.
- Under-replacing value or debt. If you trade down in value or reduce debt without adding cash, you may create taxable boot.
- Picking the wrong team. Work with a QI, title/escrow, and CPA experienced with Maricopa County procedures and 1031 timing.
Who a 1031 fits near 85254
A 1031 can suit you if you own a rental or business-use property and want to upgrade quality, consolidate, or diversify without triggering immediate tax. It is not designed for primary residences or flips held as inventory. In 85254, it can help you trade an older, maintenance-heavy rental for a newer rental, a small multifamily, or a passive DST interest, depending on your goals and time frame.
Local guidance when timing matters
Because deadlines are strict and the 85254 market can move quickly, you benefit from a proactive search plan, fast inspection workflows, and strong negotiation. If you want a tailored, concierge-level process from a local advisor who knows La Paz at Desert Springs, connect with Jaime Fernandez to map your 1031 strategy and line up replacement options early.
FAQs
What properties qualify for a 1031 exchange?
- Real property held for investment or business use that is exchanged for like-kind U.S. real property; personal residences generally do not qualify, per this Section 1031 overview.
How long do I have to identify and close?
- You have 45 days to identify replacement property and 180 days to close from the date you transfer the relinquished property, as outlined in the IRS Form 8824 instructions.
Can I buy outside Arizona in a 1031?
- Yes, you can acquire like-kind real property anywhere in the U.S.; foreign real property is not like-kind to U.S. property under the IRS rules summarized in Form 8824 instructions.
Will Arizona recognize my federal deferral?
- Arizona generally conforms to federal 1031 treatment, but conformity dates can change; confirm your tax year with your advisor and see this Deloitte note on Arizona IRC conformity for context.
What happens if I miss the 45-day deadline?
- The exchange can fail and your gain may be taxable in the year of sale; the IRS rarely grants relief, so plan ahead and follow the IRS identification rules in Form 8824 instructions.
