A 1031 exchange, also known as a like-kind exchange, is a powerful tax-deferment strategy popular with experienced real estate investors. It allows you to defer capital gains taxes on an investment property when it’s sold—as long as the investor purchases another like-kind property with the proceeds of the first property sale.
Is a 1031 exchange a tax break?
A 1031 exchange is a tax break. You can sell a property held for business or investment purposes and swap it for a new one that you purchase for the same purpose, allowing you to defer capital gains tax on the sale.
What is a reverse 1031 exchange?
This is called a reverse 1031 exchange and shares many of the same rules and requirements as a normal exchange. By adhering to these timelines and rules, you can successfully complete a 1031 exchange and defer capital gains tax on your investment property.
