A 1031 exchange allows investors to sell one investment property and reinvest the proceeds in another "like-kind" property, all while deferring capital gains taxes.
Primary Benefits
Tax deferral on capital gains, enhanced portfolio growth opportunities, and a path toward more passive income structures.
The Five-Step Process
1. Engage a Qualified Intermediary. 2. Sell your current property. 3. Identify replacement properties within a 45-day window. 4. Close on the replacement within 180 days. 5. Report the exchange to the IRS.
Critical Requirements
The replacement property must meet the "like-kind" requirement, generally must equal or exceed the value of the property sold, and every deadline must be met without exception.
This article is for informational purposes only. Consult a qualified tax professional for personalized guidance.