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1031 Exchange Explained

It is the IRS approved method that enables you to sell your income real estate income real estate and reinvest in another income real estate or income real estate, deferring all federal (and most state) capital gains taxes. This transaction is authorized by internal revenue code and is one of the best options for real estate investors to rollover their investment income real estate while preserving as much wealth as possible. The theory behind internal revenue code is that when a real estate investor has reinvested the sale proceeds into another income real estate, the economic gain has not been realized in a way that generates funds to pay any tax. In other words, the taxpayer's investment is still the same, only the form has changed (e. g. vacant land exchanged for apartment building). Therefore, it would be unfair to force the taxpayer to pay tax on a paper gain.

Contact a specialist today for a more thorough explanation and for advice relating to your personal circumstances.