What is a 1031 Tax Exchange a.k.a. “Like-Kind” Exemption?
One of the ways to avoid the Capital Gains tax is to purchase a “like-kind” property to replace the property sold. This means the new acquired home will be of equal value or greater than the property sold. There are forms to file with the IRS at tax time to notify them of the purchase of a new residence and avoiding the Capital Gains tax. There is a time limit to acquiring a new residence; the time limit is usually 180 days to take possession or to sign the closing paperwork on the new residence. Only property within the continental United States qualifies for the like-kind exchange law.
