§121 + §1031 Tax Strategy

$1.74M Deferred. $0 at Closing.

CLA® tax coordination, primary residence sale, §121 exclusion, and §1031 exchange.

Robert Boladian, CMPS® CLA® · Mission Pacific Mortgage · For advisor use · Confidential

Client Situation

A married couple in their early 60s sold their primary residence of 22 years for $3.2M. Their CPA projected a $646,000 capital gains tax bill using standard sale treatment. Their financial advisor referred them after realizing the interaction between the §121 primary residence exclusion and a §1031 exchange on the investment-use portion had not been modeled.

$1.74MTax DeferredWith §121 + §1031 coordination

$646KCPA Original ProjectionWhat the couple expected to pay

+$1.09MNet Outcome DifferenceRetained versus standard treatment

How It Worked

The Problem

The CPA modeled a straight sale with $646K in capital gains exposure.
Replacement property financing had not been arranged, and the 30-day window was closing quickly.

The Structure

The §121 exclusion was applied first, then the remaining gain was allocated to the investment-use portion.
A §1031 exchange was structured on the investment portion into a replacement DST, with financing arranged at the same time.

The Result

$1.74M in total gain was deferred with zero tax due at closing.
The client retained $646K that otherwise would have gone to the IRS.

What This Means for the Advisor

→ The FA made the introduction that changed a $646,000 tax outcome.

→ The retained capital could stay available for the client’s broader financial plan and managed portfolio.

“Our CPA told us the tax bill was unavoidable. Robert showed us an entirely different outcome. Our advisor brought us the right person at exactly the right moment.”

Client · Married couple, early 60s · San Diego

Have a client selling a primary residence or investment property? Timing matters.

§121 and §1031 coordination must be evaluated before the sale closes.

BOOK A PARTNER CALL

Outcomes anonymized. Results may vary. This is not tax or legal advice. §121 and §1031 treatment depends on taxpayer-specific facts including filing status, holding period, use history, allocation between personal and investment use, prior depreciation, and the actual closing statement. Coordination with the client’s CPA, tax attorney, and a qualified intermediary may be required. Deferral is not forgiveness. Deferred gain carries into the replacement property.

Robert Boladian, CMPS®, CLA® · NMLS #14241 · (760) 828-7444 · [email protected]
Mission Pacific Mortgage · EAB Holdings, Inc. NMLS #1786785 · DFPI Licensed · San Diego, CA