By transferring the proceeds from the sale of a property to the purchase of a new property, a 1031 Exchange allows an investor to deffer the taxes on the proceeds of the sale of the property. Some important rules apply: 1. All cash or other proceeds received from the sale of the relinquished property must be used to acquire the replacement property. The purchase price of the replacement property must be equal or greater than the net sale price of the property being relinquish