How 1031 Exchanges Work
A 1031 exchange is a type of tax-deferred exchange dictated by the Internal Revenue Code that allows an investor to defer capital gains taxes when selling one investment property for another. 1031 exchanges involve the use of proceeds from the sale of the relinquished property to acquire another “like-kind” replacement property. Real estate investors are able to build wealth, defer taxes that are typically due upon sale, and diversify their portfolios with a successful 1031 exchange.
A successful 1031 exchange offers real estate investors many benefits, including:
- Capital gains tax deferment
- Cash flow improvement
- Estate planning for beneficiaries
- Freedom from joint ownership
- Greater appreciation potential
- Increased purchasing power
- Portfolio consolidation and diversification
A successful 1031 exchange is dependent upon strict adherence to timelines and other provisions set forth by the IRS and courts, combined with extensive real estate and tax law experience. Our reliable and comprehensive services include facilitating successful 1031 exchanges for our clients.