A 1031 exchange (IRS Code Section 1031) allows an investor to defer capital gains tax by reinvesting the proceeds from the sale of investment property into qualified replacement property. Deferrals can be continued, deferring tax liability until sale without a 1031 exchange or until the tax liability passes into that investor's estate.
A 1031 tax-deferred exchange can be a powerful wealth-building tool, but the strict identification and timeline rules must be followed to the letter. A professional tax advisor should be utilized to ensure that every requirement of Section 1031 is met. Failure to do so can result in immediate tax liabilities plus associated penalties.Learn More About 1031 Exchange