A 1031 exchange lets you sell a rental and buy another one without paying the capital gains tax right now. Two conditions: the new property has to be real estate you hold as an investment, and you have to meet two deadlines that do not move. You have 45 days to name the property you will buy and 180 days to close on it, both counted from the day your sale records. Owners in Pittsburg, Antioch, Brentwood, Oakley, Bay Point and Concord come at this from both sides. Some are selling a rental they have held for years and want to put off the tax. Others are buying into Contra Costa County because the rents and the single-family homes fit a long hold. The rules are the same either way. What changes is which side of the exchange you are on, and what California adds on top.
What a 1031 exchange does, and what it does not
Section 1031 of the tax code lets you put off the tax on investment real estate when you trade it for other investment real estate. The IRS is plain about the limit: since the Tax Cuts and Jobs Act, the section covers only real property. Property held mainly for sale, meaning flips and inventory, never qualified. Real estate in the United States is also not like-kind to real estate outside it.
What the exchange does not do is erase the tax. Your cost basis in the old property carries over to the new one. The gain you deferred, and the depreciation you took, are both waiting at the next sale that is not an exchange. Many owners hold until death, when heirs receive a stepped-up basis under federal law. That is a conversation for your CPA and estate attorney, and it is one reason the living trust versus LLC question comes up in the same meeting.
The two clocks: 45 days to identify, 180 days to close
Both clocks start on the day you transfer the property you are selling, which in practice is the day your sale records. Under 26 U.S.C. 1031(a)(3), the replacement does not count as like-kind unless you identify it in writing by day 45 and receive it by day 180, or by the due date of your tax return for that year with extensions, whichever comes first. These are calendar days. A day 45 that lands on a Sunday or a holiday is still day 45.
The identification rules come from Treasury Regulation 1.1031(k)-1. You may identify:
| Rule | What you may identify | When it helps |
|---|---|---|
| Three-property rule | Up to three properties, regardless of their value | The common case: one target and two backups |
| 200-percent rule | Any number of properties, as long as their combined fair market value does not exceed 200 percent of what you sold | Trading one expensive rental for several smaller ones |
| 95-percent rule | Any number of properties of any value, if you actually acquire at least 95 percent of the total value identified | Rare; used when the first two rules do not fit |
Identify more than the rules allow and the regulation treats you as having identified nothing. The list goes in writing to the qualified intermediary or another party to the exchange, not to your own files.
A deferred exchange also needs a qualified intermediary. That is the independent company that holds your sale money between the two closings. If you take possession of the money, even for a day, the exchange fails. The intermediary is hired before the sale closes, because the exchange agreement has to be signed when escrow pays out.
What qualifies, and the rental you used to live in
Both properties must be held for business or investment. A primary residence does not qualify, and neither does a vacation home you mostly use yourself. The gray zone is the house that used to be your home and is now a rental, which describes a large share of the single-family rentals in East Contra Costa.
The IRS answered that case in Revenue Procedure 2008-16. A home counts as investment property if you owned it for at least 24 months right before the exchange and, in each of the two years before the exchange, you rented it to someone else at a fair rent for 14 days or more and your own use did not go over the greater of 14 days or 10 percent of the days it was rented. The same test applies to the replacement for the 24 months after you buy it. A former home that has been a managed rental for two full years with no owner stays passes comfortably. One that was rented for eight months does not yet.
The second qualifying rule is the one owners trip on without noticing: the taxpayer that sells must be the taxpayer that buys. If the Antioch rental is deeded to you personally and the replacement is bought by an LLC you formed last month, the IRS sees two different taxpayers. A revocable living trust or a single-member LLC that is ignored for tax purposes is generally treated as the same taxpayer as its owner, but that is for your CPA to confirm before the sale, not after. It is also why the ownership entity, the W-9 and the recorded deed have to agree before either side closes, the same alignment we check when a new owner comes under management.
Boot, debt and depreciation: what you still owe
Deferral covers the gain you roll into the replacement. Anything you keep is taxed. Cash you receive from the intermediary is called boot. Debt relief is boot too. If the mortgage on the replacement is smaller than the mortgage you paid off on the sale, the difference counts as money received unless you add cash to make up for it. Trading a $700,000 Brentwood rental with a $300,000 loan for a $650,000 replacement with a $250,000 loan produces taxable boot on both the price and the debt, even though no cash came to you.
Depreciation works the same way. The depreciation you took on the old property lowered its basis, and that lower basis carries into the replacement. When the chain finally ends in a normal sale, the unrecaptured section 1250 gain is taxed at a maximum 25 percent federal rate per IRS Tax Topic 409, plus California tax, which treats the gain as ordinary income. A 1031 exchange delays that bill; it does not shrink it. An exchange that saves $90,000 of tax today but locks you into a worse property is not a win.
California's two extra forms
California follows Section 1031 for real property, so the deferral works for state tax too. It adds two pieces of paperwork that national guides skip.
FTB Form 3840, every year, if the replacement is outside California. For tax years beginning on or after January 1, 2014, anyone who exchanges California property for like-kind property outside California must file form FTB 3840, California Like-Kind Exchanges, with the Franchise Tax Board as an annual information return, and keep filing it each year until the deferred California gain is recognized. The reason is simple: California wants its share of the gain that built up while the property sat in Pittsburg or Oakley, whenever you finally sell the Texas or Arizona replacement. Miss the filing and the FTB can tax the deferred gain in that year. A replacement bought inside California does not trigger Form 3840.
Form 593 withholding at escrow. California requires real estate withholding when California property is sold, generally 3 1/3 percent of the sales price, sent to the state by the escrow holder unless the seller certifies an exemption on Form 593. A like-kind exchange is one of the exemptions, and the instructions describe the qualified intermediary's role in a deferred exchange directly. If the exchange later fails, or you receive boot, withholding and tax follow. Your intermediary and escrow officer know the form. Your job is to make sure the exemption is certified before closing, not to chase a refund after.
Selling the Contra Costa rental into an exchange
The selling side is where the local work happens, and the calendar is the enemy. The 45-day clock starts the day your sale records, so anything that slows the sale, or leaves you choosing a replacement in a hurry, costs you options.
Three things decide how that side goes. First, the tenant. Most East Contra Costa rentals sell with a resident in place, and California law shapes every step: the lease survives the sale, selling is not by itself just cause to end a tenancy covered by AB 1482, and showings need real notice under Civil Code 1954. Our guide to selling a rental property with tenants in California walks the four paths. For an exchange, an occupied home often sells faster to an investor buyer, who is frequently an exchanger too and wants the rent running on day one.
Second, the file. Investor buyers and their lenders ask for the maintenance history, the condition reports, the lease and the ledger, and the Transfer Disclosure Statement has to be accurate. On the plans where we keep it, the sale-readiness and disclosure history is organized before the listing, which is the difference between a two-week escrow surprise and a clean close.
Third, the math. Selling costs real money before any tax. The rent vs. sell calculator walks a worked example at roughly 6 to 8 percent of the sale price in combined commissions and closing costs on a $600,000 East Contra Costa home. An exchange defers the tax line of that math; it does not touch the selling-cost line. Run the numbers on keeping, selling outright and exchanging before you list, because the exchange only makes sense if the replacement is a property you would want to own anyway.
Buying a replacement property in Antioch, Pittsburg or Contra Costa County
A growing share of the searches that land on this page are not from sellers. They are from investors looking for 1031 exchange properties for sale in Antioch or Contra Costa County, usually exchanging out of a pricier market and looking for cash flow in single-family or small multifamily homes. Three local facts matter before you identify anything here.
The housing stock fits the strategy, and the rules differ by city. About 60 percent of Antioch renter households live in single-family homes (American Community Survey 2020-2024, table B25032), which is the shape most exchangers want. But Antioch passed its own just cause eviction ordinance in 2024 that goes beyond AB 1482, with buyout-agreement rules and civil penalties. Concord runs a Residential Tenant Protection Program (Municipal Code Chapter 19.40) with rent stabilization on pre-1995 multifamily and an annual rent registry. Pittsburg, Brentwood, Oakley and Bay Point rely on state law alone. The city pages for Antioch and Concord carry the current details, and a replacement property's cash flow depends on which set of rules applies.
The 45-day clock does not wait for inspections. Identification is a written list, not a contract, so owners routinely identify three homes they have seen once. The due diligence then has to fit inside the escrow of whichever one goes to contract, with the 180-day deadline behind it. The practical defense is to put the homework before the list: a rental analysis on each candidate, meaning market rent against live local comparables, the city's rules, and the condition items that will drive reserves, so the three names on the list are three homes you would actually close on.
The replacement must be held for investment from day one. The safe harbor above runs both ways. A replacement that is rented at fair market rent for the two years after you buy it, with no owner use, sits inside it. Placing a qualified resident quickly and documenting the rent is not just an income question; it is part of keeping the exchange defensible.
The exchange at a glance
| Question | Rule | Source |
|---|---|---|
| What qualifies | Real property held for business or investment; not inventory, not a primary residence | 26 U.S.C. 1031(a); IRS |
| Identify by | Day 45 after the relinquished transfer, in writing | 26 U.S.C. 1031(a)(3) |
| Close by | Day 180, or the tax return due date with extensions, whichever is earlier | 26 U.S.C. 1031(a)(3) |
| How many | 3 properties any value; or any number within 200 percent; or any number if 95 percent acquired | Treas. Reg. 1.1031(k)-1(c)(4) |
| Former home | 24 months owned, rented 14+ days each year, personal use within 14 days or 10 percent | Rev. Proc. 2008-16 |
| Boot | Cash or net debt relief received is taxed now | IRS; Pub. 544 |
| Recapture | Unrecaptured section 1250 gain taxed at up to 25 percent federal when the chain ends | IRS Tax Topic 409 |
| California, out-of-state replacement | FTB Form 3840 every year until the gain is recognized | FTB, tax years from 2014 |
| California, at escrow | Form 593 withholding, 3 1/3 percent unless exemption certified | FTB Form 593 instructions |
| Report | Form 8824 with the federal return for the year of the exchange | IRS |
Who handles a 1031 exchange in East Contra Costa
An exchange has four seats, and no single firm sits in all of them. The qualified intermediary holds the money and papers the exchange. Your CPA or tax attorney decides what qualifies, what counts as boot and which entity should hold title. A licensed brokerage lists the property you are selling and represents you on the one you are buying. A property manager keeps the rental performing to the day of close and puts the replacement into service.
Croskey Real Estate holds the last two seats. We are a DRE-licensed California brokerage based in Pittsburg that manages rentals across Pittsburg, Antioch, Brentwood, Oakley, Bay Point and Concord, and as a brokerage we can help you acquire or sell. Wolfgang Croskey, our broker of record, carries listings himself, and our closing coordinator runs escrow, title and the contingency calendar against the exchange deadlines. When an owner we manage starts thinking about a sale, the review begins with a sell-or-hold scenario built from the property's own records: net proceeds at three price points after basis, depreciation recapture, capital gains and closing costs, a five-year hold projection, and a 1031 timeline when it applies. That scenario is prepared with AI assistance and reviewed by the broker before you see it, and an exchange is always a decision for the broker and your CPA, never for software. On the buying side it means a rental analysis on each candidate before you identify, and management from the day escrow closes, so the property is placed, rent is collected and the records that protect the exchange start on day one. The sales side of the brokerage is at croskeyrealestate.com. We do not act as a qualified intermediary and we do not give tax advice, and we will say so when a question belongs to your CPA.
Our read, from the operator's chair
The moment that defines these exchanges for us is day 30 of the identification period. The sale has closed, the intermediary is holding the money, and the owner is choosing among three homes they toured on a Saturday, with the inspection contingency on one escrow as the only protection against a bad pick. What follows are patterns from our files, not one owner's story. The owner who ran the rental analysis on each candidate before the sale closed identified three homes they already understood and used the 45 days to negotiate instead of to discover. The owner who started looking after the close identified in a hurry and spent the 180 days wishing the list were different.
The second pattern is the entity. The Antioch rental being sold was in the owner's name; the LLC meant to take title to the replacement was formed during escrow. The CPA caught it, the LLC was set aside, and the replacement closed in the same name as the sale. Had it closed in the LLC, the exchange would have had two taxpayers and no deferral. We see the mirror of this in our own onboarding, where the ownership entity goes on the owner record in the first week so the name on the deed, the W-9 and the statement agree. An exchange is the moment that alignment stops being paperwork and becomes the tax bill.
Our view is that a 1031 exchange is a buying decision with a tax wrapper, not a tax strategy with a property attached. The clocks reward owners who treat the replacement as a purchase they would make without the deferral, and they punish owners who let the deferral choose the property. The most useful thing a manager and brokerage can do is move the homework to the front of the calendar, before the first clock starts.
Where management fits in
Whether you exchange out of a Contra Costa rental or into one, someone has to run the property on both sides of the closing. Under full-service management we handle tenant placement, rent collection, maintenance coordination, lease renewals, move-out processes and owner reporting, with statements and year-end 1099 processing issued to the entity on title. If you would rather have a qualified resident placed in the replacement and then run it yourself, that is lease-only placement, a different service rather than a discounted version of the first; the pricing page lays both out. Owners holding two to ten units in East Contra Costa are the fit; a statewide or short-term portfolio is not, and we will say so.
Keep, sell, or exchange
There is no default answer. Keeping the rental avoids both the selling costs and the tax question. Selling outright pays the tax and ends the obligation. Exchanging defers the tax and keeps you invested, at the price of two deadlines and a replacement you have to want. Start with the rent vs. sell calculator to see where the Contra Costa rental stands, take the results to your CPA before you list, and if an exchange is the path, schedule a consultation so the homework and the timeline are in place before the first clock starts.
This article is general information for California rental owners, not legal or tax advice. Section 1031 qualification, boot, basis and California reporting depend on your facts; consult a qualified CPA or tax attorney and a qualified intermediary before selling. Croskey Real Estate is not a qualified intermediary. Figures and form references are current to October 2026 and change. Croskey Real Estate is an Equal Housing Opportunity provider. DRE #01990430.
Frequently asked questions
Can I do a 1031 exchange on a rental I used to live in?
Usually yes, once it has been a real rental long enough. Under IRS Revenue Procedure 2008-16, a dwelling you owned for at least 24 months before the exchange qualifies as investment property if, in each of the two years before the exchange, you rented it at a fair rental for 14 days or more and your personal use did not exceed the greater of 14 days or 10 percent of the rented days. A former home that has been a managed rental for two full years with no owner stays is inside that safe harbor; one rented for eight months is not yet.
Do I have to buy the replacement property out of state?
No. Any real property in the United States held for investment is like-kind to any other, so a replacement in Antioch, Pittsburg or anywhere else in California qualifies. Buying inside California also avoids the annual FTB Form 3840 filing, which applies only when California property is exchanged for property located outside California.
What happens to my tenant's lease when I sell a rental into a 1031 exchange?
The lease survives the sale and the buyer steps into it, including the security deposit obligations. Selling is not by itself just cause to end a tenancy covered by AB 1482, and showings require proper notice under Civil Code 1954. Many exchange buyers are investors who want the resident in place, so an occupied home is often an advantage rather than an obstacle.
Does California tax a 1031 exchange?
California conforms to Section 1031 for real property, so the gain is deferred for state tax as well. Two forms still apply: Form 593 real estate withholding at escrow, generally 3 1/3 percent of the sales price unless the seller certifies an exemption such as a like-kind exchange, and FTB Form 3840, filed every year after a California property is exchanged for out-of-state property until the deferred gain is recognized.
Can my LLC or living trust do the exchange?
The taxpayer that sells must be the taxpayer that buys. A revocable living trust or a single-member LLC that is disregarded for tax purposes is generally treated as the same taxpayer as its owner, but a new entity formed to take title to the replacement is a different taxpayer and breaks the exchange. Have your CPA confirm the structure before the relinquished sale closes, and make sure the deed, the W-9 and the owner record carry the same name on both legs.
Sources
- 26 U.S.C. 1031, Exchange of real property held for productive use or investment
- Treasury Regulation 1.1031(k)-1, deferred exchange identification rules
- IRS, Like-kind exchanges: real estate tax tips
- IRS, About Form 8824, Like-Kind Exchanges
- IRS Tax Topic 409, Capital gains and losses (unrecaptured section 1250 gain)
- IRS Revenue Procedure 2008-16, dwelling unit safe harbor (Internal Revenue Bulletin 2008-10)
- California Franchise Tax Board, 2025 Instructions for Form FTB 3840, California Like-Kind Exchanges
- California Franchise Tax Board, 2025 Instructions for Form 593, Real Estate Withholding Statement
