Sell an investment property or business, and buy a property that has equal or greater value. This must take place within 180 days. A "qualified intermediary" is necessary to make the tax-deferred exchange legal. It's usually a good idea to contact a financial advisor to verify a 1031 would be appropriate for your scenario.
The first step...
Sell the property you currently own. The contract must have specific language -- the qualified intermediary you choose prepares this. The funds from the sale go directly to the qualified intermediary.
The second step...
Find a property to buy. This is usually referred to as the "replacement property," and you are the "exchanger." You have 45 days after the sale of the property you sold to find a new property.
The third step...
Buy the replacement property within 180 days of the sale of the relinquished property.
(THIS IS ONLY GENERAL ADVICE. PLEASE CONSULT A COMPETENT ADVISOR BEFORE MAKING A SPECIFIC INVESTMENT DECISION.)
