You have a narrow clock and a competitive market when you trade into a South of Fifth condo using a 1031 exchange. The rules are precise and the condos you want often have HOA reviews, insurance nuances, and lender hurdles. With the right plan, you can protect your tax deferral and land the right South Beach address. This guide breaks down the 45- and 180-day windows, SoFi-specific condo checks, and the closing choreography you need to execute cleanly. Let’s dive in.
1031 rules you must know
A 1031 exchange lets you defer capital gains when you swap investment real estate for other like-kind investment real estate. The IRS gives you a strict timeline and identification rules you must follow. Review the IRS overview of like-kind exchanges to ground your plan in the core requirements.
- You must exchange investment or business real property for other like-kind U.S. real property. See the IRS summary of Like-Kind Exchanges under IRC Section 1031.
- You have 45 days from the sale of your relinquished property to identify replacement properties in writing.
- You have 180 days from that same sale date to close on the replacement, or until your tax return due date for that year if earlier.
- Identification rules allow the 3-Property Rule, the 200% Rule, or the 95% Rule. The procedures are detailed in Treasury Regulation §1.1031(k)-1.
- You must use a Qualified Intermediary to hold funds. You cannot have actual or constructive receipt.
- You will report the exchange on IRS Form 8824.
Your 45- and 180-day timeline
Timing starts when your sale records. That date is Day 0.
- Days 1–45: Identify up to three properties by exact address or legal description, or use the 200% or 95% rules. Your written identification must be signed and delivered to your Qualified Intermediary by Day 45.
- Days 46–180: Complete due diligence, secure financing, obtain any required HOA approvals, and close. You must close by Day 180 or by your tax filing deadline, whichever is earlier.
Tip: In SoFi, inventory is limited and HOA approvals can take time. Identify backups within the 3-Property Rule, even if you have a favorite building.
Why SoFi condos require extra prep
South of Fifth is a small, high-demand pocket at the tip of Miami Beach. You will often compete with cash buyers, second-home owners, and international buyers. Many buildings offer hotel-like services and have careful screening and rental policies. That can affect your underwriting, insurance, and timeline.
Focus early on:
- HOA rental rules and approval steps
- Association reserves, assessments, and insurance coverage
- Flood and wind insurance availability and cost
- Lender condo approval and loan terms for investment use
HOA and condo rules to review
Florida condominiums are governed by the Florida Condominium Act (Chapter 718). Before identifying a SoFi condo, obtain and review key association documents.
- Declaration, bylaws, rules and regulations
- Reserves study, current budget, and financial statements
- Insurance policies and claims history
- Meeting minutes and any special assessment history
- Rental policy and any lease application steps
Rental policies vary by building. Some limit leasing periods per year or require minimum lease terms. Some luxury buildings restrict or ban rentals. Confirm terms in writing before you identify.
Short-term rentals and local taxes
If your strategy includes short stays, verify both city rules and building rules. Miami Beach actively regulates short-term rentals, with designated zones and licensing requirements. Review the city’s official guidance on short-term rental licensing and enforcement and confirm whether a specific address is eligible.
If a unit qualifies for transient use, you may owe state and local taxes on those stays. The Florida Department of Revenue’s guide to transient rental taxes and Miami-Dade’s tourist development tax guidance outline registration and remittance steps.
Insurance, flood zones, and risk
Hurricane and flood exposure are real costs. Review the condo’s master insurance, claim history, and reserves. Rising premiums can drive assessments. Lenders and title underwriters may require flood certificates and proof of coverage. Use the FEMA map portal to check flood zones and risk for the building.
Financing for investment condos
Lenders often set tighter criteria for investment condos. You may see higher rates, lower loan-to-value ratios, or building-level limits. Align your loan process with the 180-day clock.
- Ask your lender to pre-screen the building.
- Lock a rate and clear underwriting conditions with time to spare.
- Replace equal or greater debt to avoid taxable mortgage boot, or add cash to close.
Your 1031 closing choreography
Success hinges on coordination between your QI, lender, title team, and association. Here is the forward-exchange flow.
Pre-sale planning
- Retain a 1031-experienced CPA and an independent Qualified Intermediary.
- Choose your exchange type: forward, reverse, or improvement.
- Define SoFi condo criteria: rental policy, financial health, insurance, flood and wind exposure, lender approval, and any HOA approval timeline.
- Prepare listing and closing language that directs sale proceeds to your QI.
Sale day and Day 0
- Close the sale of your relinquished property.
- Ensure net proceeds go directly to your QI. Do not take possession.
- Confirm settlement statements reflect the exchange.
- Start the Day 0, Day 45, and Day 180 clocks.
Identification by Day 45
- Deliver signed, written identification to your QI by Day 45.
- Use exact addresses or legal descriptions. If you are eyeing a unit that needs HOA approval, identify one or two backups under the 3-Property Rule or use the 200% Rule.
From Day 45 to Day 180
- Complete inspections and review HOA documents and estoppel letters.
- Obtain lender approval, clear condo conditions, and finalize insurance.
- Coordinate with the title company on QI funds and exchange paperwork.
Replacement closing
- QI wires funds directly to the closing agent.
- Verify closing statements show the exchange context and fund flow.
- Record the deed promptly and send final documents to your QI and CPA.
Debt and equity replacement
To fully defer gain, you must reinvest all net cash and replace equal or greater debt on the replacement property. If you do not replace the debt, the shortfall may be taxable boot. If you plan to adjust financing after closing, document that the new debt exists at closing to meet replacement tests.
Reverse, improvement, and DST options
- Reverse exchange: Useful when a rare SoFi listing appears before your sale closes. It adds cost and structure because an Exchange Accommodation Titleholder holds title while you sell your relinquished property. Timelines still run under reverse rules.
- Improvement exchange: Lets you direct exchange funds into improvements during the exchange period while title remains within the exchange structure.
- Delaware Statutory Trusts: DST interests can be identified and acquired as replacement property if you want passive exposure without direct condo ownership. They remove HOA approval variables but come with different cash flow and control profiles.
For mechanics and timing details, Treasury guidance in Reg. §1.1031(k)-1 and industry best practices from the Federation of Exchange Accommodators are useful references.
Practical example timeline
- Day 0: You close your sale. QI receives proceeds.
- By Day 30: You have HOA documents and insurance quotes in hand for your top two SoFi buildings.
- By Day 45: You deliver identification for up to three properties.
- Days 60–120: Lender clears condo approval, appraisal, and conditions. HOA provides estoppel. Title readies exchange papers.
- By Day 180: You close, QI funds the purchase, and the deed records.
Investor checklist for SoFi condos
Pre-listing or pre-offer
- Hire a 1031-savvy CPA and a reputable, independent QI. Confirm processes, controls, and insurance.
- Pull HOA documents, financials, and reserve studies. Check for special assessments.
- Confirm flood zone and get insurance quotes for wind and flood.
- If short-term rentals are part of your plan, verify city licensing eligibility and building rules.
- If considering a reverse or improvement exchange, line up Exchange Accommodation Titleholder counsel and budget.
At your sale closing (Day 0)
- Confirm QI receives proceeds directly.
- Verify settlement statements reflect the exchange.
- Start your 45- and 180-day calendars.
Within 45 days
- Deliver signed identification to your QI with exact property details.
- Identify backups in case of HOA denial or timing delays.
Between Day 45 and Day 180
- Track lender condo approval and underwriting milestones.
- Order HOA estoppel and insurance binders early.
- Match or exceed relinquished debt, or plan to add equity.
- Confirm any required city or county registrations can be obtained if you intend to rent.
At replacement closing
- Ensure QI wires funds directly to the closing agent.
- Confirm exchange language on settlement statements and maintain document chain-of-custody.
- Record promptly and send final packages to your QI and CPA.
Common 1031 pitfalls in SoFi
- Missing the 45-day identification deadline. Mitigation: identify backups and document delivery to your QI early.
- Touching the funds. Mitigation: wire directly to a reputable QI and lock in wiring instructions before closing.
- HOA rental rules discovered after identification. Mitigation: review building rules and talk to management before you identify.
- Lender declines the building late in the process. Mitigation: pre-clear building eligibility with your lender.
- Insurance surprises or special assessments. Mitigation: review HOA insurance, reserves, and claims early.
- Vague or verbal identification. Mitigation: use exact legal descriptions or full addresses in writing.
Your professional team
For smooth execution, bring in specialists early:
- 1031-experienced CPA or tax advisor for strategy and Form 8824
- Qualified Intermediary who is independent and experienced
- Local real estate agent with South of Fifth condo expertise
- Title company or closing attorney with Miami-Dade 1031 experience
- Lender seasoned in investment condo underwriting in Miami Beach
- Condominium attorney for complex association issues
- Insurance broker who knows Miami Beach flood and wind markets
Final take
A clean 1031 into a South of Fifth condo is all about timing, documents, and team. Set your 45- and 180-day milestones, vet HOA rules and financials, pre-clear financing, and keep funds within the exchange structure. When you pair disciplined execution with local condo knowledge, you protect your deferral and secure the right SoFi address.
Ready to map your timeline and target buildings with a private, local strategy session? Request a private market consultation with Unknown Company.
FAQs
What is a 1031 exchange for condos?
- A 1031 exchange lets you defer gain by selling an investment property and buying like-kind U.S. real estate for investment, following IRS rules and timelines.
How do the 45 and 180 days work?
- You have 45 days from your sale to identify replacement properties in writing and 180 days to close, or until your tax filing deadline if earlier.
What is a Qualified Intermediary (QI)?
- A QI is an independent party that holds sale proceeds, prepares exchange documents, and wires funds to acquire your replacement so you do not take possession.
Do SoFi buildings allow rentals?
- Policies vary by building and may limit lease terms or frequency; review HOA documents and confirm rules in writing before you identify a unit.
Can I do short-term rentals in Miami Beach?
- Only where city zoning and licensing allow and where the building permits it; check the city’s short-term rental rules and the condo’s rental policy.
How do I avoid mortgage boot?
- Reinvest all net cash and replace equal or greater debt at closing, or contribute additional equity so your total investment meets or exceeds the prior debt.
What if I miss the 45-day identification deadline?
- The exchange generally fails for deferral purposes; identify backups early and deliver signed identification to your QI before Day 45.
