1033 Exchange 1033 Exchange

Section 1033 of the Internal Revenue Code provides that gains realized from an “involuntary conversion” of a real estate property can be deferred if the owner acquires a replacement property that is similar to the property that was lost.

Section 1033 of the Internal Revenue Code provides that gains realized from an “involuntary conversion” of a real estate property can be deferred if the owner acquires a replacement property that is similar to the property that was lost.

While 1033 exchanges are similar to 1031 exchanges, there are notable differences including:

• The types of properties that qualify as “similar” properties for a Section 1033.
• No qualified intermediary is needed for a Section 1033 because there is no concern about the taxpayer receiving the funds.
• A longer timeframe to identify replacement property and reinvest proceeds – generally up to two years, or longer in circumstances where the involuntary conversion arises from a federally declared disaster.