WHY DO AN EXCHANGE?

The Concept

In a typical real estate transaction when you sell your property you are taxed on any gain realized from the sale. However, through a 1031 tax deferred exchange when you sell your property and exchange it for a like kind property you will defer your capital gains taxes. Your tax obligation is deferred because no economic gain has been realized. When the replacement property is eventually sold and is not part of another exchange, the original deferred gain plus any additional gain is then subject to tax.

Other Benefits of a 1031 Exchange

• An exchange simplifies your investment holdings allowing you to sell one or more properties and to replace with only one property.
• The definition of “like-kind property” is broad - allowing you to change the type of properties owned. (ie. Vacant Land for Apartment Building)
• An exchange creates flexibility for lifestyle changes and relocation

To go back to the Exchange Basics page, Click Here.
To learn more about 1031 Exchanges, Click Here.
To learn more about 1031 Exchange Rules and Timelines, Click Here.