What is a 1031 Deferred Exchange?

You need to look no further than the Internal Revenue Code to find a golden opportunity to sell certain real estate assets without paying 1031 capital gain taxes. Under the provisions of Section 1031 of the IRC, you can invest your profits from the sale in similar but usually more valuable property and possibly defer the capital gains indefinitely.  more

Few people who’ve paid capital gains tax on the sale of property have been thrilled with the prospect. Many wish there was some way to avoid paying them. In fact, there is a way to avoid paying capital gains tax in certain situations —- at least for a time. One way is called the 1031 deferred exchange, which is also referred to as a 1031 like-kind exchange, a situation discussed in the Internal Revenue Code that allows for deferring taxes until a later date. A person can take advantage of a 1031 deferred exchange by selling a piece of property, whether real or personal, and acquiring a piece of similar property. Under certain conditions, the taxpayer would not have to pay taxes on the sale of the first property until the initial property is sold or otherwise disposed of. This could mean deferring taxes for years. One of the most important qualifiers for a 1031 deferred exchange is the type of property involved; the property has to be intended for business, trade, or investment use. ...  more