A 1031 exchange allows sellers to transfer property and reinvest the proceeds in another property without having a tax liability that would otherwise be owed on recognized gain from a sale.

The payment of such capital gains is deferred until such time as the replacement property is sold.

The property must be held for investment or for productive use in a trade or business and must be traded for "Like-Kind" property. In essence, all real property is "Like-Kind", Improved or Unimproved. 

Advantages to a 1031 Exchange

• Preservation of working capital
• Allows greater net profits
• Allows purchase of larger or additional investment property and a faster pyramiding of wealth
• Deferring taxes until taxpayer is in a lower tax bracket or a more beneficial tax rate exists
• Consolidation of smaller properties into one larger investment in order to facilitate easier management or better cash flow
• Shifting investment from one area or locale to another to take advantage of local market opportunities
• Avoiding deferred maintenance by trading out the older properties into newer ones
• Diversification of investment portfolios by trading out of a single property or type of property into various investments or multiple properties
• Exchange from a fully depreciated property to a higher value property that can be depreciated.
• Brief Overview of Exchanging

An exchange of real property does not mean an exact "you take mine I will take yours". This almost never happens. Generally, there is a third party that purchases one of the exchange properties. An exchange may involve an infinite number of properties and property owners.

Our exchange group has over 25 years experience successfully helping investors with tax deferred exchanges.