Claude Cowork for 1031 Exchange Planning

The Section 1031 exchange is the most powerful wealth-preservation tool in the tax code, but it is also the most unforgiving. The 45-day identification window creates a pressure cooker for investors, often leading to rushed due diligence and suboptimal asset acquisition simply to "beat the clock."

For the real estate professional, Claude Cowork offers a new way to mitigate this execution risk. By treating Cowork as an always-on analyst, you can compress weeks of underwriting into days, ensuring that your replacement property is chosen based on fundamentals, not just deadlines.

This guide outlines a workflow for using Claude Cowork to manage the entire 1031 lifecycle, from the sale of the relinquished asset to the acquisition of the replacement.

Phase 1: The Virtual Deal Room Setup

The moment your relinquished property goes under contract, the clock begins to tick. Organization is critical.

The Workflow:

1. Create a Project Folder: Name it 1031_Exchange_2026.
2. Add Subfolders: Create 01_Relinquished_Property, 02_Potential_Replacements, 03_QI_Docs, and 04_Due_Diligence.
3. Grant Access: Enable Cowork for this directory.

The "Project Manager" Prompt:

"I am entering a 1031 exchange. The closing date for my relinquished property is Feb 15, 2026. Calculate my 45-day Identification Deadline and my 180-day Exchange Deadline. Create a text file named Exchange_Timeline.txt with these dates, and a backward-working schedule for due diligence. I need to identify 3 potential properties by Day 40 to leave a safety buffer."

Why this matters: You now have an immutable timeline in your project folder that the AI will reference in future tasks.

Phase 2: The 45-Day Sprint (Identification)

This is the most frantic phase. Brokers send offering memorandums (OMs) daily, and manual analysis is slow.

Ingesting Offering Memos

Instead of reading 50-page PDFs manually, drag them into 02_Potential_Replacements.

The "First Pass" Prompt:

"Review the 5 PDF Offering Memorandums in the 'Potential Replacements' folder. Create an Excel file named Deal_Matrix.xlsx.
Columns should include:

1. Property Name
2. Asking Price
3. Cap Rate (In-Place)
4. Cap Rate (Pro Forma)
5. Year Built
6. Occupancy %
7. Broker's 'Value Add' Claim (summarize in 1 sentence)

Highlight in red any property built before 1990 or with an asking price above $2.5M."

Testing the "Rules"

IRS identification rules (3-Property, 200%, 95%) are complex. Cowork can validate your strategy.

The Compliance Prompt:

"I sold my property for $1.5M. Review Deal_Matrix.xlsx. I want to identify Property A ($800k), Property B ($900k), and Property C ($1.4M). Does this combination comply with the 200% rule? If not, does it comply with the 3-Property rule? Explain the calculation."

Phase 3: Due Diligence Acceleration

Once a property is under contract, you receive the messy data: T12 financials (often scanned PDFs) and Rent Rolls (Excel).

Reconciling Income

The "Forensic Audit" Prompt:

"I have uploaded the 'T12_Financials.pdf' and 'Current_Rent_Roll.xlsx' to the Due Diligence folder.
Please perform the following analysis in a new Excel file Income_Audit.xlsx:

1. Sum the 'Gross Potential Rent' from the Rent Roll.
2. Compare it to the annualized 'Rental Income' from the last 3 months of the T12.
3. Flag any discrepancy greater than 5%.
4. List any units on the Rent Roll listed as 'Occupied' but showing $0 rent."

Lease Audit & Rollover Risk

The "Risk Assessment" Prompt:

"Review the Rent Roll. Create a pivot table showing lease expirations by year.
Answer the following in a text summary:

1. What percentage of the square footage expires in the next 24 months?
2. Are there any single tenants occupying >20% of the GLA?
3. Compare the average rent per square foot of leases expiring in 2026 vs. the current asking rents mentioned in the OM."

Phase 4: Closing & Transition

As you approach the 180-day deadline, the focus shifts to coordination with the Qualified Intermediary (QI).

The "Closing Packet" Prompt:

"Read the 'Closing_Checklist.pdf' provided by my QI. Cross-reference it with the files in the '03_QI_Docs' folder. Generate a 'Missing_Items_Report.txt' listing any documents required by the checklist that are currently missing from the folder."

Summary

In a 1031 exchange, time is the enemy. By offloading the mechanical tasks—parsing OMs, reconciling rent rolls, and tracking deadlines—to Claude Cowork, you preserve your mental energy for the decision that matters: selecting a high-quality asset that preserves your capital.