1031 Exchange Basics For CT-To-FL Moves

Are you selling a Connecticut investment property and eyeing Palm Beach County for your next move? If you want to keep your capital working, a 1031 exchange can defer federal taxes when you follow strict rules. The process is detail heavy, and the timelines are absolute, but with the right plan you can transition smoothly from CT to Florida. Below is a clear, practical guide to the core rules, deadlines, and cross-state steps so you can move fast and avoid missteps. Let’s dive in.

What a 1031 exchange does

A 1031 exchange lets you defer federal capital gains tax by exchanging real property held for investment or business use for other like-kind real property. After 2017 changes, only real property qualifies for federal 1031 treatment. Personal property does not qualify.

For a CT to Florida exchange, the like-kind requirement is typically met because both are domestic real property. Your relinquished property and your replacement must both be held for investment or used in a trade or business. A personal residence does not qualify unless it is properly converted and documented as investment property under IRS rules.

Timelines you cannot miss

Two deadlines drive every 1031 exchange. They begin on the day your Connecticut property transfers, also known as Day 0.

• Identification period: You have 45 days to identify replacement property in writing and deliver it to your qualified intermediary. This is a strict calendar period with no extensions.
• Exchange period: You must close on the replacement property within 180 days of the transfer date or by your federal tax return due date, including extensions, for that year. The earlier date controls.

Calendar these dates the same day you close in Connecticut. Late delivery or late closing generally disqualifies the exchange.

Identification methods

Your written identification must follow one of three methods under IRS rules:

• 3-property rule: Identify up to three properties of any value.
• 200 percent rule: Identify more than three properties, as long as their combined fair market value does not exceed 200 percent of the relinquished property’s value.
• 95 percent rule: If you exceed the above limits, you must acquire at least 95 percent of the total value of all properties you identified.

Use your QI’s templates and obtain written confirmation that your identification was received on time.

Why the qualified intermediary matters

The qualified intermediary, or QI, is central to your success. They prepare exchange documents, hold your proceeds, track deadlines, and coordinate with closing agents in both states. You should never receive or control the sale proceeds yourself. Direct receipt of funds usually disqualifies the exchange.

What to look for when selecting a QI:

• Independence and eligibility: Avoid disqualified parties. The QI should be independent of your agents and advisors.
• Custody and controls: Verify segregated accounts, clear escrow agreements, and written confirmations for every transfer.
• Bonding and insurance: Ask for proof of fidelity coverage and bonding, plus references from attorneys and CPAs.
• Experience with variations: If you might need a reverse or improvement exchange, confirm the QI’s process and cost structure. Ask for sample documents and a step-by-step timeline.
• Cross-state coordination: Ensure the QI routinely coordinates between Connecticut settlement agents and Florida title companies, including wire instruction formats and deed recording timelines.

CT to Palm Beach: step-by-step workflow

A tight process helps you avoid deadline stress and funding errors as you move capital from Connecticut to Palm Beach County.

Before you list in Connecticut

• Engage your CPA or tax counsel to confirm eligibility, holding-period facts, and any related-party issues.
• Discuss residency timing if you plan to establish Florida domicile. State rules are facts and circumstances, so plan early.
• Select your QI and sign the exchange agreement. Collect fee schedules and escrow documents up front.
• Align listing and contract timelines so your closings can fit within 45 and 180 days.
• Begin scoping Palm Beach replacement options. Pre-underwrite your target neighborhoods and asset types so you can identify confidently within 45 days.

At the Connecticut closing

• Direct all sale proceeds to the QI. Do not take possession of funds.
• Confirm Day 0, then calendar Day 45 and Day 180 immediately.
• Obtain written confirmation from the QI that proceeds have been received and are secure.

During the 45-day identification window

• Use one of the three identification methods and deliver your notice to the QI in writing.
• Line up inspections, association reviews, and lender steps early if financing will be used for Florida property.
• If you are considering multiple replacement properties, map out a plan for simultaneous or staggered closings that still finish by Day 180.

Closing in Palm Beach County

• Coordinate with the Florida title company on how QI wires are handled for the deed recording process.
• Budget for documentary stamp taxes on deeds and local recording fees. Confirm amounts and payment timing with the title company before closing.
• Understand property tax treatment. Investment property is assessed under non-homestead rules. If you later convert to a primary residence, learn the homestead exemption and assessment limitation process and timing.

After the exchange

• File IRS Form 8824 with your federal return for the year of the exchange. Keep full records for the CT sale and FL purchase, including exchange agreements and identification notices.
• If you changed residency, maintain evidence of domicile actions such as driver’s license, voter registration, and mailing address changes, and keep a log of time spent in each state.

Residency and state tax considerations

A 1031 exchange defers federal gain, but you should still plan for state-level issues.

• Connecticut: CT taxes personal income, and capital gains recognized by residents are subject to CT income tax. Part-year residency, change of domicile, and sale timing can affect what is taxed. The Department of Revenue Services provides guidance on residency allocation and filing for part-year residents.
• Florida: Florida has no personal state income tax. Buying property in Florida does not, by itself, establish domicile. Actions that support domicile can include moving your primary ties, updating legal documents, and spending substantial time in the state. Confirm the steps with your tax advisor.
• Future sales: If you later sell the Florida replacement property while living in a state that taxes income, your deferred gain may be taxed by that state when recognized. Plan your long-term residency and exit strategy early.

Exchange structures beyond the standard delay

Most CT to Palm Beach exchanges are delayed exchanges, where you sell first and buy within 180 days. In some scenarios, other structures may fit better.

• Reverse exchange: You acquire the Florida replacement before selling your CT property. An Exchange Accommodation Titleholder parks title temporarily. This is more complex and often more expensive.
• Improvement exchange: You use exchange funds to improve the replacement property during the exchange window. This also requires an accommodation party and close coordination.

If either option might be needed, involve your QI and counsel well before you sign contracts.

Common pitfalls and how to avoid them

• Missing deadlines: The 45-day and 180-day dates are hard stops. Calendar them, and have your QI confirm all receipt dates in writing.
• Constructive receipt: Do not touch or control the proceeds. The settlement agent must wire funds directly to the QI.
• Weak QI controls: Vet bonding, insurance, custody practices, and references. Ask for sample escrow agreements and confirm segregated accounts.
• Faulty identification: Late or informal identification can void the exchange. Use your QI’s formal templates.
• Related-party traps: If related parties are involved, document business purpose and expected holding periods. Work with your advisors on timing and documentation.
• Residency missteps: Changing domicile too close to your sale or without proper actions can leave you exposed to CT tax. Start early and document thoroughly.
• Closing surprises: Florida documentary stamps, county fees, and recording timelines can affect funding and scheduling. Confirm details with your Florida title team in advance.

Quick CT to Palm Beach checklist

• Engage CPA or tax counsel to map eligibility and residency timing.
• Select and contract with a reputable QI, review fee schedule and escrow documents.
• Align CT listing and contract timing with 45 and 180 day windows.
• Pre-screen Palm Beach properties and neighborhoods, including off-market options where appropriate.
• Close CT sale, wire funds directly to QI, and calendar deadlines.
• Deliver written identification to QI by Day 45, retain proof of receipt.
• Coordinate Florida closing, documentary stamp handling, and recording.
• Close all replacement purchases by Day 180.
• File Form 8824 and retain full documentation.

How a concierge advisor streamlines your exchange

A CT to Palm Beach 1031 exchange has many moving parts, and timing is everything. You want a single senior point of contact who can coordinate listing and sale in Connecticut, scout and negotiate Palm Beach replacement options, and keep the QI and title teams aligned. You also want discretion, quiet access to opportunities, and design-minded advice that protects long-term value.

As a multi-state advisor with a boutique, white-glove approach, I manage the cross-jurisdictional workflow while you focus on strategy. From pre-listing preparation and off-market sourcing to synchronized closing calendars, my role is to keep your deadlines secure and your options open. If you need to explore a reverse or improvement exchange, I assemble the right team early so you can proceed with confidence.

Ready to map your CT to Palm Beach 1031 exchange and move your capital with precision? Request a private conversation with Kara Cugno to plan your next steps.

FAQs

What is a 1031 exchange for CT sellers moving into Palm Beach?

• It is a federal mechanism that lets you defer gain when you sell an investment or business-use property in Connecticut and buy like-kind real property in Florida within strict timelines.

What are the 45-day and 180-day deadlines in a 1031 exchange?

• You must identify replacement property in writing by Day 45 and close on it by Day 180 or your tax return due date, whichever comes first.

Can I do a 1031 exchange if my CT property was a rental and my FL property will be a condo?

• Yes, if both are real property held for investment or business use, they are generally like-kind, regardless of property type differences.

Who holds the money during a 1031 exchange from CT to Florida?

• A qualified intermediary must hold the proceeds to prevent constructive receipt; funds should never pass to you directly.

Do I need to change residency to use a 1031 exchange from CT to FL?

• No, residency change is not required for federal deferral, but residency can affect state tax filings, so plan timing and documentation with your advisor.

What if I find the perfect Palm Beach property before my CT sale closes?

• Consider a reverse exchange, where an accommodation titleholder parks the replacement until your CT sale closes, but expect added complexity and cost.