1031 Tax-deferred Exchange

Real estate held for investment or productive use in a trade or business can be exchanged, resulting in substantial tax savings and equity preservation. While the tax is not avoided, it is delayed which results in more working capital to build an estate.

The first paragraph of IRS Code Section 1031 reads as follows: "No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment."

Although most exchanges are simultaneous, you may purchase your replacement property before or after you sell the property. You may exchange one property for multiple properties, or you may exchange multiple properties for one or more properties. You may exchange for a vacant property and construct a building on it. You may exchange for a property needing improvements and use your exchange proceeds to make these improvements.


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