Nothing broke: the One Big Beautiful Bill Act (July 2025) preserved Section 1031 with no deferral cap, the TCJA's real-property-only limitation is permanent law, and the 45/180 deadlines, identification rules, and boot math all work exactly as before. The $500K cap and per-lifetime-limit proposals stalled in committee. What's genuinely new for exchangers is around 1031, not in it — permanent 100% bonus depreciation changes the math on some replacement strategies. Plan on current rules; watch the proposals like weather, not like news.
Section 1031 enters 2026 unchanged and un-capped. The One Big Beautiful Bill Act signed in July 2025 — the largest tax legislation since 2017 — left like-kind exchanges fully intact, dropping the $500,000 deferral cap floated in earlier drafts. The Tax Cuts and Jobs Act's core limitation stands as permanent law: real property only, held for investment or productive business use. Deadlines, identification rules, boot, related-party restrictions — all operate exactly as described across our core guide. If you were waiting for legislative dust to settle before exchanging, it settled.
Qualifying property: U.S. real property held for investment or business use, exchangeable for any other U.S. real property similarly held — the like-kind definition remains broad within real estate and closed to everything else (equipment, crypto, partnership interests, your residence — though see the 121/1031 playbook for the borders). Deadlines: 45 calendar days to identify, 180 to close, tax-filing-deadline trap included, no extensions outside federally declared disasters — the full mechanics live in the 45/180 guide. Full deferral math: equal-or-greater value, all equity reinvested, debt replaced — shortfalls are boot. Reporting: Form 8824 with your return for the year of the exchange, disclosing the dates the IRS uses to verify your deadlines.
The 2025 law's real estate impact is indirect but real. Permanent 100% bonus depreciation is the headline: replacement properties with substantial personal-property components (cost-segregation candidates — multifamily, hospitality, self-storage) can now pair an exchange's deferral with immediate depreciation on the segregated components, a combination that has genuinely changed replacement-property selection math for some investors. Permanent TCJA-era individual rates also firm up the planning baseline. None of this changes exchange mechanics — it changes what the smartest replacement looks like, which is a conversation for your CPA, not a webpage.
Honest inventory of what's been floated and where it stands: a $500K per-year deferral cap (proposed repeatedly since 2021, excluded from OBBBA, stalled); a one-exchange-per-lifetime limit (introduced, no floor vote); and various Opportunity-Zone-interaction restrictions (committee purgatory). Meanwhile 2026's housing legislation aimed at institutional single-family investors may reshape parts of the market exchangers operate in without touching Section 1031 itself.
How to think about repeal risk: Section 1031 has survived every tax reform since 1921, and it survived 2025 with the industry's lobby fully engaged. Could a future Congress cap it? Yes. Should that possibility change a 2026 exchange decision? Almost never — no serious proposal has been retroactive, and paying a definite six-figure tax bill today to hedge an indefinite future rule change is bad math wearing a prudent costume.
Exchange on current law, document like an auditor is watching (they increasingly are — exchange scrutiny rises as usage grows), and if your gain is large enough that a future cap would matter, that's an argument for exchanging sooner under today's uncapped rules, not later. The one genuinely new homework item for 2026: ask your CPA whether cost segregation plus bonus depreciation belongs in your replacement analysis. It's the rare tax development that adds a tool instead of a trap.
A free, no-obligation introduction to a vetted 1031 or DST partner — with our referral relationship disclosed in writing. On the 45-day clock? Same-day attention.