What are the tax advantages in a 1031 exchange?
You can defer the payment of capital gains taxes associated with real estate transactions. By selling one property and buying a higher-priced property, you can also get additional depreciation deductions, which can act to increase your after-tax income. In addition, you can eliminate paying taxes on the recapture of depreciation you’ve taken on the property. Can I use my primary residence or second home in for a 1031 exchange? No, only real estate property held for business or investment purposes can be used in a 1031 exchange, and both properties in the transaction must be of “like kind”.
