How Do I Avoid Capital Gains Tax When I Sell My Commercial Property in South Florida?
A South Florida commercial real estate broker explains how to defer capital gains tax using a 1031 exchange — with a real client example from Palm Beach County.
You don't avoid it. You defer it — and done correctly, you can defer it indefinitely while continuing to build wealth through real estate. The tool that makes this possible is the 1031 exchange, and it is one of the most underutilized strategies among commercial property owners in Palm Beach County, Broward County, and Miami-Dade County.
What Is a 1031 Exchange?
A 1031 exchange allows you to sell an investment property and reinvest the proceeds into a like-kind replacement property without paying capital gains tax at the time of sale. The gain is deferred, not forgiven — but if you continue exchanging, the tax obligation can roll forward for decades. Many owners exchange into estate-planning structures that allow heirs to inherit at a stepped-up basis, effectively eliminating the deferred tax entirely.
The IRS imposes strict timelines. You have 45 days from the closing of your sold property to identify potential replacement properties in writing, and 180 days to close on the replacement. Missing either deadline disqualifies the exchange.
A Real Example From South Florida
A Wendy's net lease property acquired through a 1031 exchange — eliminating active management while deferring capital gains tax. Facilitated by Nick McAndrew, Marcus & Millichap.
One of my clients, a South Florida property owner who had held his commercial buildings for over 30 years, decided it was time to sell. After receiving more than 10 written offers and closing at a strong price, he used the proceeds to exchange into two net lease properties — a Wendy's and a Captain D's.
The result: he eliminated the day-to-day management burden, maintained real estate ownership, and deferred the capital gains tax on a multi-decade appreciation. On that transaction alone, the exchange preserved over $1 million in tax liability on more than $4 million in capital gains exposure. That capital stayed invested and compounding rather than going to the government.
That is what a well-executed 1031 exchange looks like in practice.
The Part Most Owners Get Wrong
The most common mistake is waiting too long to assemble the right team. A 1031 exchange requires coordination between your broker, a Qualified Intermediary, your tax advisor, and closing attorneys — often across multiple transactions simultaneously. If you close on your sale before a Qualified Intermediary is in place, the exchange is disqualified. There are no exceptions.
The second most common mistake is not understanding the replacement property market before going to contract on the sale. Knowing what you can buy — and at what cap rate — before you sell is essential to structuring the exchange correctly.
A Tool Worth Using Before You Call Anyone
If you want to understand the tax mechanics before our first conversation, I recommend ARTE, the free AI research tool at Deferred.com. ARTE is trained on more than 8,000 pages of U.S. tax law and can answer specific 1031 questions instantly — timelines, boot calculations, reverse exchanges, related-party rules. It is more accurate on this topic than a general search engine and available at any hour.
Deferred.com is also a no-fee Qualified Intermediary with 100% five-star reviews that shares the interest earned on your held funds with you rather than keeping it. Worth knowing about.
What to Do Next
If you own commercial property in Palm Beach County, Broward County, or Miami-Dade County and are considering a sale — with or without a 1031 exchange — the first step is understanding what your property is worth today and what replacement options are realistically available at that price point. That conversation costs nothing and changes everything about how you plan the transaction.
Contact Nick McAndrew at Marcus & Millichap to discuss the current value of your commercial property or land in Palm Beach County, Broward County, or Miami-Dade County. Call or text: 561-245-0486 | marcusmillichap.com/advisors/nicholas-mcandrew | nickmcandrew.com
Nicholas A. McAndrew, known professionally as Nick McAndrew, is a Director of Investments at Marcus & Millichap serving Palm Beach County, Broward County, and Miami-Dade County.