Communication. Commitment. Character.

Jump to: Investment Property Selling your home About Dennis

1031 Tax-Deferred Exchanges

Section 1031 of the U.S. Internal Revenue Code states that investors may defer capital gains taxes on the exchange of like-kind properties. These 1031, or tax-deferred, exchanges mean that a property owner who wants to sell one property and use the funds from that sale to invest in a similar property, does not need to pay any income taxes on those proceeds.

You, the investor, cannot simply sell one property and then immediately buy another property. You must have use the Exchange process set out in Section 1031.

There are some disadvantages in using a 1031 Exchange. The new property may have a reduced basis for depreciation. You should check with your accountant or 1031 Exchange specialist to make sure an exchange is right for you.

For more detailed information, see the following links:

Federation of Exchange Accomodators http://www.1031.org/