What is an IRC 1031 Tax deferred Exchange & why should you exchange?
Believe it or not, IRC 1031 Tax Deferred Exchanges have been around since 1921. Exchanges or non-taxable sales, allow real estate investors to trade out of property held for the productive use of business or trade or for investment purposes into other investment property or properties without paying capital gains taxes due on the gain realized on the original property. What it is. To qualify for a Tax Deferred Exchange, the exchanger must exchange the original investment property for a “like kind” replacement property or properties. It is at this point that many investors become confused. We often hear the question: “Does ‘like kind’ mean that I must trade my apartment building for another apartment building or must I trade my commercial office building for another commercial office building.” When the tax code talks about “like kind” property, the meaning is quit simple. An investor can trade any type of investment property or property held for trade or business, for any other type of
