Colorado 1031 Exchange

Colorado's 4.4% State Tax Adds to an Already Large Federal Bill

Colorado taxes capital gains as ordinary income at a flat 4.4%. That stacks on top of the federal bill: capital gains up to 20%, the 3.8% net investment income tax, and up to 25% on depreciation recapture (the tax owed on deductions you already took). On a $500,000 gain, the combined federal and state exposure can pass $140,000. A 1031 exchange, which lets you sell one investment property and reinvest in another while deferring the tax, can defer the whole amount and keep your equity invested in Colorado's Front Range and mountain markets.

One Colorado step to plan for: when an out-of-state owner sells Colorado real estate, the state requires withholding (Form DR 1083) of the lesser of 2% of the sale price or the net tax due, unless an exemption applies. As your qualified intermediary, we coordinate the exemption paperwork with your closing agent so a valid exchange is not held up by unnecessary withholding. For more detail, see our Colorado 1031 exchange rules guide.

What a Colorado 1031 Exchange Costs

Our fee is a flat $1,000 for a standard delayed exchange, paid $750 at your sale closing and $250 at your purchase closing. No upfront fees and no percentage of your proceeds. Reverse and improvement exchanges are quoted separately. We include your exchange documents and coordination with your title company, lender, and CPA.

Commercial and Investment Property We Exchange in Colorado

We act as qualified intermediary across Colorado investment real estate: apartments and multifamily, retail, office and medical office, industrial and warehouse, self-storage, single-tenant net-lease (NNN), short-term and mountain rentals held for investment, mixed-use, and investment land. Investment or business-use property generally qualifies. Primary homes and flips generally do not.

How to Start Your Colorado 1031 Exchange

Call (888) 508-1901 before your sale closes. We prepare your exchange agreement and route the proceeds to a segregated, FDIC-insured account. From your sale closing, you have 45 days to identify replacement property and 180 days to close. We track both dates with you, coordinate Colorado's withholding and exemption paperwork, and release funds only for qualified replacement property.

A Note on Risk

A 1031 exchange defers tax. It does not erase it. The 45-day and 180-day deadlines cannot be extended. To defer the entire gain, you need to reinvest all of your net proceeds and replace any paid-off debt with new financing or cash. Any shortfall, called boot, is taxable. Colorado's non-resident withholding adds a filing step even when the exchange works. WealthBuilder 1031 serves only as your qualified intermediary. We do not give tax, legal, or investment advice, and we do not sell investments or securities. Please confirm your situation with your attorney and tax advisor.

1031 Exchange Activity Across Colorado

Investors run exchanges across Colorado, from Denver and Colorado Springs to Boulder and Fort Collins. Replacement property commonly includes multifamily, retail, industrial, and net-lease assets, along with Delaware Statutory Trust (DST) interests for investors who want a hands-off option.

Investors move equity into and out of Colorado. Sellers here should plan for Colorado's withholding at closing (the lesser of 2% of the price or net proceeds), which a valid exchange generally exempts; we coordinate the paperwork. The state where you reinvest sets the rules for the new property.

Frequently Asked Questions About 1031 Exchanges in Colorado

How much does a 1031 exchange cost in Colorado?

A flat $1,000 for a standard delayed exchange, split $750 at your sale closing and $250 at your purchase closing. No upfront fees. Reverse and improvement exchanges are quoted separately.

Does Colorado tax a 1031 exchange?

Colorado defers the gain in a properly structured exchange, the same way the IRS does. It taxes capital gains as ordinary income at 4.4%, and out-of-state sellers may face 2% withholding (Form DR 1083) unless an exemption applies, which a valid exchange generally supports.

Do I have to reinvest within Colorado?

No. You can exchange Colorado property for replacement property anywhere in the United States and still defer Colorado tax, subject to the normal federal rules.

Do I need a qualified intermediary for a 1031 exchange in Colorado?

Yes. The IRS does not allow you or your agent to take possession of the sale proceeds. A qualified intermediary receives the funds, holds them in a segregated account, and releases them only to buy your replacement property.

How long do I have to complete a 1031 exchange in Colorado?

You have 45 days from your sale closing to identify replacement property, and 180 days to close on it. These federal deadlines do not extend.

What property qualifies for a 1031 exchange in Colorado?

Most real estate held for investment or business use qualifies, including rentals, multifamily, commercial buildings, and land. Primary residences and property held mainly to flip generally do not.

1031 Exchange Services Across Colorado

WealthBuilder 1031 serves real estate investors in communities throughout Colorado. Find your city below.

• Alamosa
• Aurora
• Boulder
• Broomfield
• Centennial
• Colorado Springs
• Denver
• Durango
• Fort Collins
• Fort Morgan
• Glenwood Springs
• Golden
• Grand Junction
• Greeley
• Gunnison
• La Junta
• Lakewood
• Lamar
• Littleton
• Lone Tree
• Pueblo
• Rangely
• Sterling
• Trinidad
• USAFA
• Westminster

Do not see your city? We serve investors statewide. Call (888) 508-1901 to start your Colorado 1031 exchange, or learn the details in our Colorado 1031 exchange rules guide.