Understanding the 1031 Exchange Process.

As per IRC §1031, a valid property exchange is the selling of an investment property with the intention of reinvesting the profits into a new property thus deferring capital gains taxes. These transactions allow investors to continue investing in other properties without losing their investment equity to taxes. If you exchange investment property exclusively for "like-kind" investment property, there is no immediate tax liability thereby making the exchange a desirable option for investors eager to keep the property's equity for re-investment.

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