1031 Exchange Explained

1031 Exchange Explained

A tax-deferred exchange is a method by which a property owner trades one or more relinquished investment properties for one or more replacement investment properties of like-kind, while deferring the payment of federal income taxes and some state taxes on the transaction. In turn, IRC section 1031 provides that no gain or loss shall be recognized on the exchange of investment property held for productive use in a trade or business. Performing a 1031 exchange allows property owners to use all of the proceeds from the initial sale of investment property. Many property owners use such exchanges as leverage for entering more lucrative investment property deals, which in turn increases their cash flow and diversifies their investment portfolios while at the same time consolidating their investments into one investment property.

If you recently sold an investment investment property or you're considering selling, we can match you with a TIC advisor able to help you explore your 1031 exchange options.