What is an IRC section 1031 tax deferred exchange? How does it differ from a Starker Exchange?
Section 1031 of the Internal Revenue Code (IRC) provides for the deferment of long-term capital gains taxes on the sale of investment real estate when it is exchanged for other investment real estate of equal or greater cost than the real estate being sold. The term “Starker Exchange” is still used at times to describe the process. Mr. Starker agreed to sell his Oregon timberland if the buyer would hold the proceeds until Starker found a suitable replacement property. Prior to then, exchanges were done simultaneously with buyers and sellers essentially sitting down at a closing table and trading deeds. Starker’s successful 1979 court case allowed for non-simultaneous exchanges and people began to refer to the process by his name. 2. What is meant by investment real estate? For purposes of this paper, investment real estate is defined as any real estate other than your personal residence or a second home. It is usually a rental property that is either residential; e.g., a house, townhou
