1031 Exchange Explained




1031 Exchange Explained

The IRC section 1031 or 1031 exchange is an effective tax deferral strategy available to taxpayers. This code allows for a rollover of equity of like investment properties, through a 1031 exchange, to take place without requiring the payment of capital gains taxes on the initial investment. By deferring any applicable taxes, the property owner has more money available to invest in other investment property. In effect, you receive an interest free loan from the federal government in the amount you would have paid in taxes.

When combined with a 1031 exchange, tenants in common investment properties can be even more attractive. 1031 Exchanges allow you to defer capital gains taxes by investing in a like investment property. When using tenants in common investment properties with a 1031 exchange, you can defer capital gains while diversifying your investments. You can purchase shares of various tenants in common investment properties in different locales with the proceeds of the 1031 sale.

If you are considering the sale of an investment investment property, contact a specialist today to discuss your 1031 exchange options.


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