A 1031 exchange allows multifamily investors to sell a property and reinvest the proceeds into a like-kind replacement property, deferring capital gains taxes that would otherwise be due immediately, preserving cash for further investment.

Exchanging a fully depreciated multifamily property for one with a higher basis allows investors to start a new depreciation schedule, generating additional tax deductions and creating more tax-efficient income streams.

Multifamily owners can perform successive 1031 exchanges, deferring taxes indefinitely and allowing wealth to grow tax-free until a potential sale without exchange or through estate planning strategies like stepped-up basis.