1031 Exchange Guide for New Hampshire & Massachusetts Real Estate Investors

A 1031 exchange is one of the most powerful tax-deferral strategies available to real estate investors in New Hampshire and Massachusetts. Done correctly, it allows you to sell an investment property and reinvest the proceeds into a new property — deferring federal capital gains taxes that could otherwise take 15%–20% of your profit. Here’s a complete guide to 1031 exchanges for NH and MA investors.

What Is a 1031 Exchange?

A 1031 exchange — named after IRC § 1031 of the Internal Revenue Code — allows real estate investors to defer capital gains taxes when selling an investment property, provided the proceeds are reinvested into a “like-kind” replacement property within strict IRS time limits. “Like-kind” in this context is broadly defined: virtually any real property held for investment or business use qualifies, regardless of property type.

For example, a New Hampshire investor can sell a rental duplex and reinvest the proceeds into a commercial office building in Massachusetts — both qualify as like-kind property under IRC § 1031. The key is that the property must be held for investment or business use, not personal use.

The Critical 1031 Exchange Deadlines

The Qualified Intermediary (QI) Requirement

To do a valid 1031 exchange, you must use a Qualified Intermediary (QI) — also called an exchange accommodator. The QI holds the sale proceeds from your relinquished property and uses them to acquire the replacement property. If you receive the proceeds yourself — even briefly — the exchange fails and the full gain becomes taxable.

Foy Law Office coordinates directly with your QI throughout both closings — the sale of the relinquished property and the purchase of the replacement property. We ensure all required exchange documentation is prepared, executed, and coordinated with the QI on the precise timeline required by IRS rules.

Key Rules to Complete a Valid 1031 Exchange

• Both the relinquished and replacement properties must be held for investment or business use
• The replacement property must be of equal or greater value to fully defer all capital gains
• All net proceeds from the sale must be reinvested (no “boot” — cash kept from the exchange is taxable)
• The taxpayer on the relinquished property must be the same as on the replacement property
• A Qualified Intermediary must be identified before closing on the relinquished property
• Replacement properties must be identified in writing to the QI within the 45-day window

1031 Exchanges in New Hampshire and Massachusetts

Both New Hampshire and Massachusetts have their own tax treatment of capital gains that must be considered alongside the federal 1031 rules. New Hampshire does not have a general income tax or capital gains tax on most real estate gains for individuals. Massachusetts, however, imposes its own capital gains tax on real estate gains — and a state-level 1031 exchange may be available for MA properties. Our attorneys advise on both the federal exchange requirements and any state-specific tax implications for your NH or MA investment property transaction.