Sell a Rental Property and 1031 Into Industrial

To sell a rental property and 1031 into industrial is the classic trade-up: you exit the tenants-and-toilets business, defer the entire capital gains bill, and land in property where businesses — not households — pay the rent.

Houses and industrial are both like-kind under the exchange rules. The IRS doesn't grade property types; it asks whether both were held for investment.

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The 1031 Exchange Clock — 180 Days, One Start
DAY 0 Sale closes — clock starts DAY 45 Identification deadline DAY 180 Closing deadline IDENTIFY · 45 DAYS CLOSE ON WHAT YOU IDENTIFIED · BY DAY 180 Both windows start the same day. Calendar days — weekends and holidays count. No extensions. 45 calendar days to identify, in writing, to your QI 3 properties you can identify, any value (standard rule) 180 days total to close — runs concurrently, not after

Why Landlords Make This Trade

The sequence matters: engage a Qualified Intermediary before your sale closes — touch the proceeds yourself and the exchange is dead. Then 45 days to identify, 180 to close.

  • One house = one tenant = 0% or 100% occupancy. Small bay industrial runs dozens of tenants per property
  • Business tenants sign leases, carry insurance, and don't call at midnight
  • Years of appreciation come out of a low-yield house and into income-producing square footage
  • Full tax deferral — gains and depreciation recapture both ride through the exchange

Current Replacement Property Inventory

The Brown Portfolio

Houston, TX · Small Bay Industrial

$7,760,000

57,565 SF · 100% occupied

East Houston Shallow Bay Portfolio

Houston, TX · Small Bay Industrial

Contact for Pricing

· 100% occupied

Highway 30 Business Park

College Station, TX · Small Bay Industrial

Contact for Pricing

186,225 SF · 94.5% occupied

View all available properties →

Common Questions

My rental has appreciated a lot. How much tax gets deferred?

All of it — federal capital gains, depreciation recapture, and applicable state tax all defer if the exchange is done right and you buy equal or greater value.

Can I sell one house and buy a share of a bigger property?

You can combine exchange proceeds with financing to buy larger. Fractional DST interests also exist — see our DST comparison for the trade-offs.

What if I've already listed my rental?

Fine — but get the QI engaged and your replacement shortlist built before you accept an offer. The exchange must be set up before closing, not after.

Related Exchange Scenarios

Ready to Deploy Your 1031 Capital?

Call us at 717-553-6888 or send an inquiry. We coordinate the exchange from identification to closing.

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