Investment Strategy
1031 Exchange From California Into Las Vegas
Defer six figures in capital gains tax, exit California's landlord environment, and redeploy your equity into Las Vegas investment property. This is the complete playbook for California investors executing a 1031 exchange into Nevada in 2026.
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Authority Statement
“We specialize in 1031 exchanges from California into Las Vegas — coordinating QIs, managing identification deadlines, and sourcing investment-grade properties that meet exchange requirements. The process is engineered, not improvised.”
You own a rental property in California. It has appreciated significantly. Selling triggers a substantial capital gains bill — potentially $100,000+ between federal and California state taxes. A 1031 exchange lets you defer that entire tax hit, exit California, and deploy your full equity into Las Vegas real estate with better cash flow, lower property taxes, and zero state income tax on rental income.
Table of Contents
The Basics
What Is a 1031 Exchange in Plain English
Section 1031 of the IRC allows you to sell an investment property and defer all capital gains taxes — as long as you reinvest the proceeds into another "like-kind" property held for investment or business use.
Like-kind does not mean identical. A California duplex can be exchanged for a Las Vegas single-family rental. A commercial building can be exchanged for vacant land held for investment. The requirement is that both properties are held for investment — not personal residence.
Strict Deadlines
The 45-Day and 180-Day Windows
Once you close the sale of your California property, two strict clocks start. Miss either deadline and the exchange fails — proceeds become taxable as if the exchange never happened.
We maintain a pipeline of off-market and pre-MLS investment properties in Summerlin, Henderson, and the Southwest corridor specifically for 1031 exchange buyers who need to move decisively within their identification window.
Why Nevada Is Ideal for 1031 Reinvestment
California investors deploying 1031 proceeds into Nevada gain several structural advantages that compound over time.
Zero State Income Tax
Nevada has no state income tax. Rental income from your replacement property is taxed only at the federal level. In California, that same income would be taxed at up to 13.3%.
Landlord-Friendly Laws
Nevada eviction timelines are significantly shorter than California. No statewide rent control. No just-cause eviction requirements for single-family rentals.
Strong Growth Trajectory
Las Vegas has seen consistent YoY appreciation in luxury and mid-luxury segments. Limited buildable land in Summerlin and Henderson creates natural supply constraints.
Lower Carrying Costs
Nevada's effective rate is ~0.5%–0.7% vs California's 1.1%+ (plus Mello-Roos). On a $950K property, that is $3K–$5K/yr savings in property taxes alone.
Purchasing Power
What $1M Buys: California vs Las Vegas
Understanding the purchasing power difference is critical for exchange planning. Your California equity goes significantly further in Nevada.
$1M in Orange County
Size
1,400–1,800 sq ft · 3 bed / 2 bath
Age
Built 1970s–1990s typical
Property Tax
~$11,000/yr estimated
Rental Yield
3.5%–4.5% gross estimated
$1M in Summerlin / Henderson
Size
2,800–3,500 sq ft · 4–5 bed / 3–4 bath
Age
Built 2015–2025, many new construction
Property Tax
~$5,500/yr estimated
Rental Yield
5%–6.5% gross estimated
All figures are illustrative estimates based on 2025–2026 market observations. Actual values vary by specific property and market conditions.
Pitfalls to Avoid
Common Mistakes California Investors Make
These six errors can cost you tens of thousands or disqualify your exchange entirely. We engineer our process to prevent each one.
Starting the Vegas search after the California close
You have 45 days to identify. If you begin searching on day one, you are already behind. Start touring Las Vegas properties 60–90 days before your California listing goes live.
Choosing the wrong qualified intermediary (QI)
Your QI holds your exchange proceeds — often $500K+. Use a QI with segregated, bonded accounts and a track record. Ask about their insurance and escrow structure.
Receiving 'boot' accidentally
Boot is any non-like-kind property you receive — including cash. If your replacement costs less than what you sold, the difference is boot and is taxable.
Ignoring the debt replacement requirement
You must replace both equity and debt. If your CA property had a $300K mortgage, your replacement must have at least $300K in debt (or add equivalent cash).
Buying in the wrong Las Vegas neighborhood
Some areas have HOA restrictions prohibiting rentals. Others have oversupply issues. Work with an agent who knows which communities are investor-friendly.
Missing depreciation recapture planning
When you eventually sell without another exchange, depreciation recapture applies at 25%. Factor this into your long-term hold strategy.
Illustrative Scenario
Working Example: $1.1M CA to $950K Vegas
Here is how a typical 1031 exchange from California to Las Vegas might look. All figures are illustrative — consult your CPA for actual tax obligations.
Duplex in San Diego, CA
Original Purchase
$550,000
Current Value
$1,100,000
Remaining Mortgage
$280,000
Estimated Gain
$550,000
Tax Without Exchange
~$148,000 combined
Single-Family in Henderson, NV
Purchase Price
$950,000
New Mortgage
$300,000 (meets debt replacement)
Gross Rental
$4,800/mo estimated
Annual Cash Flow
$18,000–$24,000 estimated
State Income Tax
$0 (Nevada)
Frequently Asked Questions
Quick answers to the most common 1031 exchange questions we hear from California investors.
What is a qualified intermediary and do I need one?
A QI is a third party who holds proceeds during the exchange. You cannot touch the funds yourself — if you do, the exchange is disqualified. Yes, a QI is required. Choose one with bonded, segregated accounts and E&O insurance.
Can I do a 1031 if I lived in the property part-time?
The property must have been held primarily for investment. Safe harbor (Rev Proc 2008-16) suggests renting for at least 24 months with personal use limited to 14 days or 10% of rental days per year.
What is 'boot' and how do I avoid it?
Boot is any value received that is not like-kind — typically cash or debt relief. Purchase a replacement of equal or greater value and replace all debt, or add cash to make up the difference.
How does depreciation recapture work?
Depreciation deductions carry forward to the replacement property. When you eventually sell without exchanging, all accumulated depreciation is recaptured at 25%. This is deferral, not elimination.
Can I identify more than three replacement properties?
Yes, under the '200% rule' — any number of properties as long as combined FMV does not exceed 200% of the relinquished property's sale price. Most investors use the simpler three-property rule.
Ready to Start Your 1031 Exchange?
Book a 15-minute strategy call. Bring your property numbers — we will map your timeline, show you current Las Vegas inventory, and connect you with qualified intermediary referrals.