I have had a number of clients who sell their buildings and then call me up and want to talk about setting up a 1031 exchange, since they don’t want to pay the taxes on the huge gains they just made.
A 1031 exchange is a real estate investing tool that allows investors to swap out an investment property for another and defer capital gains or losses or capital gains tax that you otherwise would have to pay at the time of sale.
A 1031 exchange has to be done through a qualified custodian of 1031 exchanges and there is a time limit on how long the two transactions can be separated by, as well as other rules and regulations. After the fact is not a possibility for a 1031 transaction.
Now, once you sell a 1031 property and don’t roll it over into another qualified transaction, you will be hammered by all of those prior unrecognized gains and depreciation. Just be prepared for a large tax bill.