1031 Exchange Rules in California – What You Need to Know

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California’s 1031 exchange rules are anything but straightforward, and they keep changing. To make smart real estate transactions, understanding them is crucial. Here’s a comprehensive overview of the 1031 exchange rules along with practical tips to help you navigate the process.

What is a 1031 Exchange?

A 1031 exchange, also called a like-kind exchange, allows you to swap one real estate investment property for another—deferring capital gains taxes in the process. Named after Section 1031 of the Internal Revenue Code (IRC), this strategy is widely used by investors, real estate agents, and title companies.

By reinvesting proceeds from a sold property into a like-kind property, you postpone paying capital gains tax. For investors, this is an effective way to grow their portfolio through continuous reinvestment.

Rules for 1031 Exchange in California

  • The new investment property must be like-kind to the one being sold. Most business or investment real estate qualifies regardless of quality.
  • Both properties must be located in the United States.
  • Primary residences or vacation homes do not qualify.
  • The replacement property must be of equal or greater value than the one sold.
  • The exchange must involve only like-kind property; no cash, stocks, or other forms of payment are allowed. Any difference in value must be paid in cash by the investor.

Why You Need a Qualified Intermediary

A Qualified Intermediary (QI) is essential for executing a valid 1031 exchange. As a neutral third party, the QI holds the sale proceeds and uses them to purchase the replacement property. The investor is not allowed to access the funds directly—doing so invalidates the exchange.

Choose a reliable and experienced 1031 exchange agency. The QI will:

  • Prepare all required legal documents
  • Hold proceeds in a secure escrow account
  • Ensure IRS rules are followed during the transaction

What Is the Exchange Timeline?

Time limits are strict under the 1031 exchange rules:

  • 45 Days: From the sale of the original property, you must identify one or more replacement properties within 45 days.
  • 180 Days: The exchange must be completed within 180 days after selling the original property or by the due date of your tax return (including extensions), whichever comes first.

Missing any deadline disqualifies the exchange and triggers capital gains taxes.

Taxes Involved in a 1031 Exchange

To fully defer capital gains taxes, follow these financial guidelines:

  • Reinvestment Requirement: The replacement property’s purchase price must be equal to or greater than the relinquished property’s sale price.
  • Equity Reinvestment: All equity from the sale must be reinvested. Retaining cash will result in taxable gains.
  • Debt Replacement: Debt on the new property must match or exceed the debt on the old property. Cash can be used to compensate for any shortfall in debt—but not the other way around.

Call the Experts

A 1031 exchange is a powerful tax-deferral strategy for real estate investors looking to build long-term wealth. But due to its complexity and strict IRS requirements, it’s important to work with a team that understands the ins and outs of real estate finance and property law.

ALT Financial is a full-service firm specializing in 1031 exchanges across California. Our experienced advisors provide end-to-end support—from identifying suitable like-kind properties to coordinating with a Qualified Intermediary and managing timelines to ensure compliance.

We’re not just a 1031 exchange service provider. As a trusted Refinance broker and CRE mortgage specialist, we can help you align your investment goals with broader financial strategies—whether that means refinancing an existing property or expanding your commercial real estate portfolio.

Let ALT Financial guide you through your 1031 exchange with confidence. Get in touch today to learn how we can help you defer taxes, grow your portfolio, and make the most of your real estate investments.

 

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What Is an SBA Loan? Everything You Need to Know

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An SBA loan is a government-backed small business loan that helps cover costs for businesses looking to start, expand, or sustain operations. The loan is issued by a private lender and backed by the federal government, particularly the Small Business Administration (SBA), a government agency supporting entrepreneurs and small businesses.

The government guarantee reduces lender risk and enables them to provide loans with favorable terms to small businesses, especially those that failed to qualify for conventional loans. It promotes economic growth by encouraging entrepreneurship, job creation, and innovation.

In the 2025 fiscal year, over $18 billion in SBA 7(a) has been approved.

How Do SBA Loans Work?

A borrower can apply for an SBA loan through a bank or credit union. The lender applies to the SBA for a loan guarantee. If the borrower defaults on the loan, the government pays the guaranteed amount to the lender.

Everyone with a minimum of 20% ownership in the borrowing company must provide an unconditional personal guarantee to the SBA to use personal assets for payments if the business is unable to repay.

Together, these guarantees mitigate the risk for lenders, increasing their likelihood of working with small businesses.

When the SBA approves the loan, the lender becomes responsible for closing the loan and disbursing the loan proceeds. The borrower repays the lender directly monthly.

Types of SBA Loans

SBA loans are of several types, with each loan program designed for specific business types. Here:

  • 7(a) Loans: The most flexible and common SBA loan, the 7(a) loan is suitable for financing general business needs.
    Loan Size: Up to $5 million
  • CDC/504 Loans: For purchasing long-term, fixed assets like machinery, land, facilities, etc.
    Loan Size: Up to $5 million ($5.5 million for select projects)
  • Express Loans: Fast funding for working capital, real estate, and equipment purchases.
    Loan Size: Up to $500,000
  • Microloans: For equipment, machinery, inventory, and supplies.
    Loan Size: Up to $50,000
  • Disaster Loans: To cover expenses and repair damage from a declared disaster.
    Loan Size: Up to $2 million
  • International Trade Loans: Long-term funding to expand export sales or compete globally.
    Loan Size: Up to $5 million
  • Working Capital Pilot Program: A flexible line of credit for varied business needs.
    Loan Size: Up to $5 million
  • Export Working Capital Loans: To support export sales.
    Loan Size: Up to $5 million
  • Export Express Loans: Accelerated funding to grow exports.
    Loan Size: Up to $500,000

How to Apply for an SBA Loan?

The first step is to choose the loan that meets your business needs. For example, a 7(a) loan is flexible, while a 504 loan is perfect for large-scale investments. Then, check if you qualify:

  • The business must be an American for-profit business.
  • It must qualify as a small business under SBA guidelines.
  • Evidence of financial necessity and an explanation of how the loan will be used.
  • The business must have sought alternative funding before an SBA loan.
  • Evidence of good credit and the ability to repay the loan.
  • Not overdue on any current government-issued loans.

Step 1: Find an SBA Lender

Reach out to banks or credit unions offering SBA loans. Look for a lender familiar with SBA processes to help you navigate smoothly.

Step 2: Prepare Your SBA Loan Application

You’ll need to prepare several documents, including:

  • SBA-specific forms: Form 1919, Form 912, and Form 413.
  • Business financials: Profit & loss statement, cash flow projections, balance sheet.
  • Supporting documents: leases, licenses, business plan.
  • Credit reports for personal and business finances.

Step 3: Submit Your SBA Loan Application Package

Submit the complete package to your lender. The lender will review and may request additional documents before forwarding to the SBA. Once approved, you’ll receive the loan terms and begin the closing process. This may take several weeks to months depending on complexity.

Conclusion

Applying for and receiving an SBA loan is not complicated, as long as you are doing it right. With ALT Financial, you can seamlessly navigate the process and secure the funding for your business needs. Got a question? Call us at Call Now 1-800-981-5626

How to Choose a Mortgage Broker

How to Choose a Mortgage Broker in California

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Do you want better loan options? Do you want to avoid overpaying on your mortgage? Without guidance, navigating the complex mortgage process can result in expensive mistakes, jeopardizing your financial situation. Steer clear of such problems by choosing the best mortgage broker California.

A reliable broker does more than just connect you with lenders; they provide advice and reasoning throughout the process. Here is a breakdown of the essential factors you must consider when choosing a mortgage broker. But first:

What is the Role of a Mortgage Broker?

A mortgage broker bridges the gap between lenders and borrowers. They help potential owners locate the best mortgage options aligned with their requirements. They evaluate the borrower’s finances and credit history and, depending on them, search for lenders offering the best terms.

Don’t mistake mortgage brokers for being loan scouts—they are the investor’s partner and will guide you throughout the process. First-timers may find it tricky to understand features like payment holidays and overpayment flexibility, which an expert broker will clearly explain.

A mortgage broker’s expertise increases your chances of getting better terms and rates than those you could manage on your own. They have an extensive network of lenders, which gives them access to a wide variety of loans. Additionally, they are empowered with persuasive negotiation skills, which means better value and rates.

Key Factors to Consider When Choosing a Mortgage Broker

  • Experience and Expertise
    The first consideration when seeking a full-service mortgage broker is their track record. The more, the merrier. Also, the variety of loans they have handled plays an integral role in their portfolio. More experience means they have better connections with lenders and are adept at their work, so your chances of securing better deals are high. Don’t hesitate to ask them about their experience.
    Once their experience is comfortable for you, check how well they understand your financial situation and goals and what type of loans they recommend. When a broker knows what suits you, they are likely competent enough to secure the best deals.
  • Transparency in Fees
    A mortgage broker generally charges anywhere from 1% to 3% of the loan amount, which is paid by the bank. However, in some cases, the borrower may cover their fees upfront or at the closing. Assess their services to ensure you get the best possible deal. You are better off choosing a broker who helps you save in the long run—for which you might have to pay slightly more.
    Note: Mortgage brokers are legally required to be transparent about their fees and commissions.
  • License
    No license – no broker. A mortgage broker must have a license, which ensures they comply with the regulatory requirements and professional standards for operating in this industry.
    A license guarantees that the broker has the necessary education, has passed the required exams, and adheres to ethical guidelines. As a borrower, you will find peace of mind when your broker has a license.
    Note: Verify their license using the Nationwide Multistate Licensing System (NMLS) database or by checking with your state’s licensing authority.
  • Communication Style
    Effective communication seals the deal. You need someone who understands you, responds promptly to your queries, and is eager to help you whenever you need. They must be active listeners. You don’t want someone who starts strategizing without knowing your scene.
    While not even the most effective communicator may be your best match, notice how they communicate. They should at least be able to adapt to your preferences as best as they can, and that effort needs to be visible.

Final Thoughts

Choosing a refinance broker doesn’t require focusing on every little detail. While buying or financing a home-buying process can be overwhelming, it is also a beautiful process. You need the right guidance to keep yourself from feeling stressed.

At ALT Financial, we are committed to making this process seamless for you. Our extensive network of experienced mortgage brokers and personalized recommendations will help you connect with those offering the best rates, terms, and overall experience.