1031 Worth It? Suspended Losses Exceed Cap Gain

[Chris Gottshall]

I'm asking this question on behalf of a client who is selling a property where the total capital gain looks like it will be less than the suspended losses they have accumulated on their tax return over the years of owning the property. The losses were suspended in the past due to W2 income and they are now self-employed, meaning their income tax rate is likely to be lower, if that makes a difference in the answer. I've encouraged them to contact a 1031 specialist, but this question has me curious so I wanted to bring it to this forum for consultation as well. At a glance, and as a non-expert, it sounds like it might not make sense to bother with an exchange if the losses are unlocked at sale. What do you think?