Rethinking Your Next Move? A 1031 Exchange Might Be the Smartest Way to Do It
If you have owned an investment property for a while, whether it is a rental, a mixed use space, or land, you may be wondering what is next. Maybe it is time for something that brings in better income. Or something easier to manage. Or simply something you would enjoy a bit more.
That is where a 1031 exchange can come in.
A quick refresher: what is a 1031 exchange?
It is a tax rule that lets you sell one investment or income producing property and reinvest the proceeds into another without triggering capital gains tax at the time of sale. To qualify, both the property you are selling and the one you are buying need to be held for investment purposes.
This kind of exchange allows you to keep your money working, rather than handing over a large portion in taxes. But because there are strict timelines involved, having a strategy in place before the sale is essential.
Timing matters
Once you close on the sale, you will have 45 days to identify potential replacement properties and 180 days to close. That window moves quickly, and in a competitive market, that can be a challenge.
This is why we always encourage early planning. Having off market access and local insight can make a real difference. Whether you are working with a long term rental, or simply repositioning your portfolio, a well timed 1031 exchange can help you move forward without missing opportunities or overpaying.
You will also need to work with a Qualified Intermediary to handle the transaction. The proceeds from your sale cannot pass through your account. They must be held by the intermediary until closing on your new purchase. It is a straightforward process, but one that needs to be set up correctly from the beginning.
Why it makes sense here
In Bellport and Brookhaven, we have seen more and more buyers take advantage of this kind of structure. What starts as a tax strategy often turns into a lifestyle decision, investing in a property that not only generates seasonal or year-round income but also offers lasting value.
Well appointed homes in this area, especially those with a pool and outdoor space, continue to perform exceptionally well in the summer rental market. There is limited inventory, high demand, and a growing number of people looking for short term escapes that feel like home.
What about vacation homes?
Yes, you can use a 1031 exchange to purchase a vacation property, as long as it functions primarily as a rental.The IRS has rules in place to ensure the property is used for investment purposes, which generally means it should be rented out most of the time and not used heavily for personal stays.
In a market like Bellport or Brookhaven, where rental demand is high and homes are often booked months in advance, this kind of hybrid model is not only achievable, it is common.
Many of our clients use this strategy to buy homes they can enjoy lightly and rent confidently, knowing that the numbers work either way.
Looking for the right property?
Here are a few examples from our current portfolio that align beautifully with the 1031 strategy:
6 Woodland Park, Bellport Village
A fully renovated three bedroom home with four baths, a heated gunite pool, and a smart, turnkey layout. Just blocks from the village center, this one is ready to rent the day you close.
22 Bell Street, Bellport Village
Set on one of the most beloved streets in the village, this 4-bedroom home includes a pool, private yard, outbuilding ideal for an art studio, and a layout that works for extended stays. Seasonal renters love its charm and proximity to everything in town.
6 Peat Hole Lane, Bellport Village
Tucked away in the estate section, this home feels like a private retreat. The recent renovation brings in tons of light, and the layout, pool, and location make it a consistent rental favorite.
4 Brookside Avenue, Bellport Village
This well maintained cottage is currently rented year-round, offering immediate and consistent income with minimal management.
Thinking it over?
A 1031 exchange is not just about taxes. It is about momentum. If you have built equity in one property and are ready to move into something that offers stronger income, less upkeep, or better alignment with your goals, this is one of the most effective tools available.
We have helped buyers through this process many times and are happy to talk through what a smart next step could look like for you.
One last thing: We are not attorneys or accountants, and this is not legal or tax advice. But we are happy to connect you with trusted professionals who can guide you through the financial and legal side of the exchange, while we focus on helping you find the right property.
