What is a 1031 Tax Deferred Exchange?
A 1031 tax deferred exchange is an exchange in which capital gains tax deferral is available to real estate owners who sell their investment, rental or business real estate and reinvest the net proceeds in other real estate. Real Estate held for these purposes are called “Like-Kind 1031 Properties”
Property owners may sell like-kind properties and defer taxes on the sale’s profits by meeting the requirements of Internal Revenue Code 1031 Exchange. The purpose of the 1031Exchange is to allow sellers of like-kind property to buy replacement property of like -kind within a specific time period and defer taxes.