Baby Boomers and Real Estate: Using 1031 Exchanges to Simplify Retirement

Baby boomers (born 1946–1964) remain one of the most active groups in today’s real estate market. Many are reevaluating how their properties fit into retirement goals — whether that means downsizing, consolidating, or shifting into more passive investments. One of the most effective tools for making that transition is the 1031 exchange.

What is a 1031 Exchange?

A 1031 exchange allows investors to defer capital gains taxes when they sell an investment property, as long as the proceeds are reinvested into a like-kind property. For boomers who have built decades of equity, this can preserve wealth and create more options for retirement planning.

Why Boomers Use It

• Moving to Passive Ownership – Many boomers are tired of being landlords. Through a 1031 exchange, they can sell management-heavy rentals and reinvest into passive options such as Delaware Statutory Trusts (DSTs), which provide fractional ownership in professionally managed properties.

• Helping the Next Generation – Some boomers use exchanges to buy rental homes where their children relocate, or invest in duplexes that provide both family stability and rental income.

• Consolidating or Diversifying – Retirees can consolidate several smaller assets into one more valuable property, or spread investments across markets and property types for stability.

• Lifestyle Planning – Others exchange into rentals in future retirement destinations (beach, mountain, or resort towns), renting them short-term before eventually converting them into primary residences.

What About Primary Residences?

1031 exchanges only apply to investment properties. However, boomers selling a longtime home can still benefit from smart planning. Married couples may exclude up to $500,000 in capital gains if they’ve lived in the home two of the last five years. If gains exceed that amount, converting the home into a rental before selling may allow them to combine the exclusion with a 1031 exchange.

Key Takeaway

Today’s market requires strategy. For baby boomers, the 1031 exchange offers a way to preserve wealth, reduce management stress, and create flexibility for retirement.

👋 Thinking about selling or repositioning your real estate investments? At the Ina Medina Group with Simply Vegas, we help clients navigate these options with trusted strategies, high-end marketing, and local expertise. Let’s connect and explore the best options for your next move.