1031 Tax Deferred Exchanges for Real Estate Investors
What is a Tax-Deferred Exchange
There are many tax advantages to investing in real estate. A significant advantage is the ability to sell investment property at a profit and roll the proceeds into another investment property and defer the capital gain tax. Under section 1031 of the IRS code, real estate, held for investment, can be exchanged for "like-kind" real estate and the capital gain tax deferred provided the transaction is structured according to the exchange rules.
Why Make an Exchange
- Upgrade the size or quality of your investment, including merging several small properties into one large one.
- Restore depreciation that is about to expire.
- Change investment locations to take advantage of market trends