1031 / Tax Deferred / Tax Free Exchange

1031 Exchange

Generally, when you sell real estate held for investment or business use, you have to pay tax on the gain from the sale of your property of the Internal Revenue Code allows you to defer paying capital gains taxes.

A 1031 Exchange is not a tax loophole. It is a code section written by Congress specifically to allow anyone who meets its requirements to sell their property and defer paying tax on the gain.

The main point of a 1031 tax-deferred exchange is that capital gains taxes on real estate held for investment can be deferred indefinitely if the owner of qualifying property exchanges, rather than sells it.

The savings from the exchange will vary by the size of the investment, your own income and other factors (such as state tax rates).

There are strict criteria and time limits (45 days to identify a replacement property of like-kind and 180 days to close the sale on the replacement property) for executing a successful 1031 exchange.

For more information, go to: https://www.irs.gov/newsroom/like-kind-exchanges-under-irc-code-section-1031