A successful 1031 exchange requires matching the replacement property's purchase price, equity invested, and debt replaced to those of the sold property to fully defer capital gains taxes. Key thresholds include replacement purchase price ≥ amount realized, equity invested ≥ net equity from sale, and debt replaced ≥ debt paid off or offset by cash. Transactional expenses are deductible, but operational expenses paid from exchange proceeds may create taxable boot. Careful planning with advisors is essential to avoid tax exposure.